NEWPORT, R.I. (AP) — Hundreds of prime acres are up for grabs in this waterfront city and its neighboring towns, valuable commodity on an island known for prized beaches, lavish homes and natural beauty.

The 260 acres on Aquidneck Island were for decades owned by the U.S. Navy, which says it no longer needs the land and is moving to unload it. The island communities envision the property as untapped economic potential for sweeping new development.

But another suitor — the Narragansett Indian Tribe — says the land falls under its ancestral footprint and is mounting a bid that may conflict with local development plans.

The Narragansett, Rhode Island’s only federally recognized American Indian tribe, say getting the land would allow it to expand far beyond its existing reservation and would create room for a hotel complex, shopping, a cultural center, park space and public housing.

The tribe and its supporters see an unprecedented opportunity for a population that’s grappled with poverty and whose past efforts at development, including a tax-free smoke shop and proposed casino, have been rejected by the state.

”The tribe’s current land has been extremely limited. This would help boost the tribe’s ability to success,” said John Brown, the tribe’s historic preservation officer. ”We shouldn’t have a chance for economic self-sufficiency?”

The tribe’s bid has rankled some local officials, who say it was submitted after they had done years or work and planning in anticipation of using the land.

”It’s delaying the process, and I don’t think it’s benefiting the city of Newport,” said Paige Bronk, Newport’s director of planning, zoning and inspections. ”Their involvement, I would consider to be detrimental to our efforts.”

Federal agencies receive right of first refusal for surplus military land, so the Narragansett enlisted the help of the Bureau of Indian Affairs, which has asked to acquire it on the tribe’s behalf. Navy officials say they’re in the process of responding to the bureau’s request.

The Defense Department says it has multiple options for disposing of surplus land, including conveying it for public benefit or selling it at fair-market value.

Meanwhile, the land has been advertised as surplus in the Federal Register, a key step toward making it available to nonfederal agencies like local governments and redevelopment authorities or ultimately private interests.

The bureau has asked to obtain the property for free and to waive a requirement that whoever gets the land pay for its environmental cleanup. The Navy has determined that asbestos, lead-based paint and other contaminants taint at least some of the property.

The tribe identifies itself as Rhode Island’s aboriginal residents, greeting white explorers in the 16th century and selling land rights to Roger Williams, the colony’s founder. Federally recognized in 1983, the 2,600-member tribe occupies a reservation in the southern Rhode Island town of Charlestown that is well removed from the state’s commercial hub.

Poverty remains a problem; an average of 41 percent of the tribe’s members were unemployed between 2005 and 2008, according to the tribe’s application for the land.

The Narragansetts have had a fractured relationship with the state.

In 2003, a state police raid on a tribal smoke shop that was selling tax-free cigarettes sparked a violent confrontation; three tribe members were convicted of misdemeanor charges and four others were acquitted. Voters statewide rejected a 2006 ballot question that would have allowed the tribe and Harrah’s Entertainment to open a casino.

The availability of the land offers a fresh chance to level the playing field for the Narragansett, said Douglas Luckerman, a lawyer for the tribe.

”This is a real opportunity for them to move ahead with economic development on solid footing — not gaming, not cigarette taxes,” Luckerman said.

Though the Navy says it has not assessed the value of the land — in Newport and neighboring Portsmouth and Middletown — the property is unquestionably valuable, given its size and waterfront proximity.

The crown jewel is a 10-acre shuttered hospital complex abutting the bay in Newport that opened in the early 20th century but was replaced by a new facility more than 10 years ago. The Navy hospital complex alone is likely worth at least a couple million dollars, said Newport’s Bronk.

There are also sprawling acres once used to store underground fuel in Portsmouth and other land that offers convenient water access.

As part of the nationwide Base Realignment and Closure process over the last decade, the Defense Department re-evaluated its land needs and decided to part with the Newport acreage.

Local officials have for years been brainstorming uses for the property, including arrangements with private developers, and continue to tout the potential of job creation and transportation improvements.

Newport, for instance, hopes a private developer or corporation will ultimately acquire the land and convert it into mixed-use projects that could include a hotel, marina, office space or housing, Bronk said. A blueprint document created by the Aquidneck Island Planning Commission envisions upscale housing developments and shopping, pedestrian trails and bicycle paths.

The tribe submitted an application last year, after the commission had been publicly discussing its vision for the document.

After requesting and receiving several extensions, the bureau said in December that it would not pursue the land after failing to get answers from the Navy about the land’s value and how much it would cost to clean it up, Luckerman said.

Two months later, though, the bureau notified the Defense Department that it was again interested in the land in the ”furtherance of the tribe’s economic development.”

It’s not clear where that request stands or who will get the land.

Tina Dolen, executive director of the island’s planning commission, said the tribe’s bid has left local officials in a holding pattern.

”We’re really in great shape,” she said. ”We just need the green light.”