Montville - The fate of a proposed 120-unit affordable housing complex in town remains in doubt after the site for the project was found by the state to be of historical and spiritual significance to the Mohegan Tribe.

The State Historic Preservation Office recently issued an opinion that argues The Villages would be built within an area that includes the remains of the fort of Sachem Uncas, founder of the Mohegan Tribe. The project is planned for a 12.2-acre parcel near Fort Hill Drive off Route 32 and is about 1 mile south of Mohegan Sun casino.

Among the other historically significant findings in the area are Moshup's Rock, the Mohegan Congregational Church and several stone features made by the "Little People," the spirits who are believed to protect the tribe, according to the state. The state opinion agreed with many arguments made by the tribe; a prior consultant's report had argued the area is eligible for listing on the National Register of Historic Places.

Editor's note: This version clarifies an earlier version. The state opinion and consultant's opinion are two separate opinions.

Developers for the $19 million project have been required to commission an archaeological study of the site and other reviews because they have sought a federally guaranteed loan for financing. The property is owned by brothers Dado and Vlad Coric, whose family has owned the property for years.

Many in town have watched The Villages project closely with the worry that state and federal opinions could set a precedent that may deter or prevent future building projects that involve public money. The worry, expressed by some at a public hearing in June, is that the Mohegan Tribe may make similar claims to historically significant land in the future as a way of controlling development.

The developers of The Villages and the tribe are now expected to discuss a plan that could allow the project to move forward while still protecting the area's historical and spiritually significant aspects, Mayor Ronald K. McDaniel Jr. said.

Chuck Bunnell, chief of staff for external affairs for the tribe, said previously the tribe is not against development in the town, but he declined Thursday to discuss whether or not the tribe believes an agreement can be reached for this project to proceed. He said he could not comment because of a confidentiality agreement the tribe entered earlier this year with the developers.

Some in town are bothered by the prospect of the tribe arguing against any plan that would allow The Villages to move forward.

"If that's the position, what that dictates to me and the town is the tribe has the power to determine what will and won't be built in our town," Town Councilor Rosetta Jones said. "That really will stymie our economic growth."

Jones said it was a good sign for the town that the recent state opinion included a revised "traditional cultural property" zone. This zone, which includes the historically significant items and areas, was scaled back considerably from a prior proposal. The zone previously included much of the Route 32 corridor, including Montville Commons, and prime areas for future development.

The Villages is proposed for the Fort Hill section of town and is a short distance north of St. Bernard School. Plans go back several years and have undergone many reincarnations as a down economy has forced developers to reconsider their plans.

The current plan involves the U.S. Department of Housing and Urban Development (HUD) and says that the property would have one-, two- and three-bedroom apartments. Fifty-four of the 120 units would be designated for lower-income people, including retirees and employed professionals. The other 66 units would be rented at market rate.

Tenants in the affordable units would be required to hold a job or have some source of income and would pay rent, including utilities, of no more than 30 percent of their monthly income. The state Department of Economic and Community Development and HUD would provide some financial assistance.

The Coric brothers have questioned why the tribe was able to build a power substation and an elderly-housing complex near the site in question if both are within the area now being argued for inclusion on the national register. The brothers have also argued the historically significant area the tribe is seeking to protect is located on a 6.5-acre parcel next to the 12.2-acre area they wish to develop.

Vlad Coric at the June public hearing said the brothers would be willing to donate to the tribe the half-acre on which it is believed the Uncas fort was located. They have also expressed a desire to work on a mitigation plan or conservation easement with the tribe.

Dado Coric said earlier this week that the brothers continue to work to move the project forward. He acknowledged previously that he and his brother have discussed selling their land to the tribe. The two sides could never agree on a price.

jeff.johnson@theday.com