The developer that owns what historians believe is one of the most significant Native American archaeological sites on the East Coast says it has been trying for more than two years to get permission from the state to build houses.

The state, by holding up the already-permitted project, has effectively taken private land, the developer argues in its lawsuit.

But in a response last month, the state says the developer acted hastily in taking legal action and should have exhausted efforts to resolve the matter before seeking damages in federal court.

In a case that could decide the future of the 25-acre site in Narragansett, the state argues that Downing/Salt Pond Partners LP failed to meet the standard set by the U.S. Supreme Court for cases in which a private party claims the government has taken land without paying for it.

Quoting a 1985 Supreme Court case known as Williamson County Regional Planning Commission v. Hamilton Bank, the state argues that a “property owner has not suffered a violation” of the Takings Clause of the U.S. Constitution “until the owner has unsuccessfully attempted to obtain just compensation through procedures provided by the state.”

That means the developer, if it has cause to file a lawsuit, should have filed it in state court, the state argues.

The case centers on what historians and archaeologists say is the most significant find of Native American artifacts in Rhode Island and one of only two sites on the East Coast to have remains from what appears to be an entire seaside Indian village.

The discoveries started after Downing/Salt Pond, since renamed Churchill and Banks Companies LLC, moved forward in the mid-1980s with a plan to build 79 houses just east of Point Judith Pond. Before proceeding, the company had to check for historical artifacts, a common requirement in the state’s coastal areas. There were none on the eastern portion of the property, where 26 houses now stand, but on the western side, archaeologists found stone tools and pottery fragments. The discoveries led to more excavations, which led to more discoveries, including an Indian burial ground.

Legal disputes and rising costs eventually led Downing to put the project on hold, but the company returned to the site in 2006, paying a private archaeology lab to excavate a quarter-mile strip of land that was to become a road. The team soon uncovered evidence of ancient storage pits and 22 Indian dwellings that date to the 1300s and are believed to be just a fraction of what the entire site contains.

The state Historic Heritage and Preservation Commission responded by asking the state Coastal Resources Management Council to withdraw the permit it had issued for the project in 1992.

The CRMC, in turn, told Churchill and Banks that its permit would have to be reviewed in light of the preservation commission’s request.

According to the company’s court filings, repeated attempts to clarify the permit’s status were met with silence. But when the company returned to the site in June 2009 and started working, the CRMC issued a cease-and-desist order.

Two months later, Churchill and Banks filed its lawsuit in U.S. District Court. The suit seeks unspecified damages, though it does say the company’s investment in the site has been more than $10 million.

Michael Rubin, head of the environmental unit at the state attorney general’s office, argues in the state’s motion to dismiss that Churchill and Banks, rather than trying to find a solution, filed its lawsuit just weeks after being told to stop work.

But William R. Landry, the company’s lawyer, said the project had been on hold for more than a year. He also said a federal lawsuit was necessary because the state has no procedure for dealing with a permitted project that is on hold.

“It’s basically a taking,” he said. “The state would like to control the property but instead of paying for it they’re just stopping the project.”

There has been talk about the state buying the property, but Landry and Edward F. Sanderson, executive director of the state historic preservation commission, said the two sides have not been able to agree on a price.

redgar@projo.com