Answer:
The sentence is:
There was an indigenous village near the city.
If the village is not anymore near the city, then we should use the preterit tense:
Hubo una villa indigena cerca de la ciudad.
If we want to give some description only, and we don really know if the village is still there or not, we need to use the imperfect tense.
Habia una villa indigena cerca de la ciudad.
