Preston — The economic impact a proposed $600 million development of the former Norwich Hospital property would have on the region could be double the initial investment, spinning off hundreds of construction jobs in addition to the permanent positions the Mohegan tribe promised as it agreed to buy the nearly 400-acre property.

Steve Lanza, a University of Connecticut economist, said Friday that the Mohegans' announced intention to develop a mixed-use site that could include retail, housing, recreation, retail and lodging would likely add another $600 million to the local economy in addition to the initial five-year investment by the tribe. The plan promises the addition of between 200 and 700 jobs to the local economy.

Steve MacKenzie, executive director of the Southeastern Connecticut Enterprise Region economic-development agency, said the area has not seen an investment like this since the Mohegans and Mashantuckets developed their local casinos, the two largest in North America.

"The economic impact is going to be wonderful," MacKenzie said. "All the municipalities in our region will benefit."

And the benefits will accrue beyond the financial bounty of increased economic activity and more jobs, said Tony Sheridan, president of the Chamber of Commerce of Eastern Connecticut.

"You can't underestimate the psychological effect of an investment of this size at this particular time in our history," Sheridan said. "The decision was made by a group of smart people who believe in this region."

"Just the fact they are investing raises confidence in the business environment," agreed Jason Vincent, the town planner in Stonington who previously worked doing economic development in Norwich.

Vincent said the Montville tribe's development will help diversify the region's tourism offerings while also allowing the Mohegans to broaden their business investments beyond casino-related ventures.

"There are synergies," added economist Lanza. "It's not like you're dropping this thing in the middle of nowhere. It's complementary."

Lanza said the area is primed for tourism and may become a way station between the two casinos.

And it may raise property values in Preston, Lanza suggested, considering that the project would double the town's grand list once it is completed, potentially allowing taxes to be cut. Values around the development also could see a boost, Lanza said.

"You may see additional development down the road," he said.

The only negative mentioned in relationship to the project was traffic, which is expected to increase significantly.

But Deberey Hinchey, mayor of Norwich, said she wasn't worried about more vehicles in the area, preferring to focus on the economic boost the region will likely see.

"It's huge the impact it's going to have on Norwich," she said.

Some Montville residents were grumbling, acknowledged Mayor Ronald McDaniel, thinking Preston will be getting more out of this deal than his town has received in two decades of hosting the Mohegan Sun casino — mostly because the Norwich Hospital property is taxable, while tribal land is not.

But McDaniel said he harbors no hard feelings.

"Something needed to be done with the property across the river," he said. "We certainly welcome the news."

MacKenzie of SeCTer said he envisions a development with commercial and retail spaces, senior housing and recreational areas that will allow people to live, work and play in the same area. Preston, Norwich and Montville are the municipalities that will likely see the biggest boost from the new development, but he said benefits will spiral out from there.

"We're not so big that all towns can't benefit," he said.

"The proposed uses ... you couldn't do much better," added Jim Butler, executive director of the Southeastern Connecticut Council of Governments.

"The confidence in the region it shows — we can leverage that," said MacKenzie, whose organization helps sell outsiders on moving to the region. "It's going to make our job easier."

"All of this spells good for eastern Connecticut," said the chamber's Sheridan. "The economic ripple effect is going to be significant."

l.howard@theday.com