I ran across an article on Old Sarum, which in the 1220s is a failing city in England due to mundane politics, about to lose its cathedral, and it occurs to me that it would make an excellent covenant site, with some effort. Old Sarum was harvested for stone for the new site (now Salisbury) and was definitely under mundane control, but that seems manageable.
Why you would want to assert a covenant in an abandoned city is up to the group. Maybe there's a magical locus or even a regio.
This concept seems entirely portable to most medieval locations.
Things to do, overlapping, non-exclusive, and/or contradictory:
Confirm some kind of magic aura, unless one can be generated (unlikely).
Acquire some claim to the remains of the city.
Bribe the local nobles to look the other way and the local peasants to ignore the place.
Hire, eject, or sponsor the remaining mundanes. Careful accommodation seems wise.
Probably, wrap the place in fogs, greenery, and illusions to shroud it and enhance its ruined image.
Treat carefully with local faeries to establish the new situation and boundaries.
Harvest some of the remaining stone to repair and rebuild.
It may make an interesting player or non-player site, and has some potential for Order politics.
Selectively harvest stone from the buildings to make the entire site appear more ruined while constructing a network of functional buildings among the ruins such that you need enter and investigate the city more properly in order to even realize that someone lives there. Collapse select buildings to turn the ruins into a maze of blocked streets, construct new buildings inside the shells of abandoned buildings, build underground, cover buildings in rubble, plant plants to obfuscate the landscape even further etc. If you feel extra then use magic to re-landscape the place.
This will obviously not fool anyone who does a thorough search of the place but it might be enough that people who dont try to challenge the assumption that the place is deserted never realize that they are wrong.
This will serve as an excellent complement to any magical concealment and possibly lower the threshold for how much magic you need to setup in order to make this work.
The big question is: How are you gonna make a living for this covenant? At some point the covenant will need to interact with the surrounding mundane world and doing so without giving away your location will be a challenge. Likewise if you are planning on not interacting or keeping interactions at a minimum, you will need space for farming, which is difficult to hide.
The site might be presented as completely abandoned, which requires considerable effort to maintain, or mostly abandoned, which takes less effort and lowers mundane exploration interest (hopefully), or haunted, which keeps many mundanes away, but could attract the adventurous. Attracting the occasional adventurous type may actually be a bonus, as they might make good companions.
The city will have space for gardening, certainly, and raising small livestock. Grain and beef can be bought and shipped in quietly or smuggled in by night, depending on how secret the place is.
Wrapping the place in two or three layers of maze; outer greenery and fog, inner illusion and confusing streets, has a good deal of appeal to me.
I need a name for this place, so I'll call it Civis Mort.
The inner covenant could essentially be a town (mundane medieval cities are places with cathedrals, which this place does not, anymore) with a light industrial economy, shipping finished goods to other covenants or mage-friendly merchants. Side business of supplying magically created stone to local builders, if the places is only "mostly abandoned." They might later host an annual exotic goods market, once well established. The concept might change over time from "abandoned" to "shunned but somehow surviving".
Depending on how they have arranged things with the Crown/local aristocracy, they probably provide occasional magical advice or support (completely non-interfering, of course, quaesitor).
If Civis Mort is not too far from a trade route or the new city, crime such as banditry or running a group of urban thieves using a Fagan-like agent seems like the perfect sort of income source for the covenant. Transporting anything less valuable than coin and other small, higher value items seems to me likely to attract and reveal their presence and that is what you seem to want to avoid since the primary defense seems to be secrecy. In addition there is the problem that selling magically created stone will cause inflation and may be an issue in some areas that follow that rule about silver, not to mention the cost in vis.
[edit:] An Inn (hospitality) or merchant business run out of the nearby city could work well too.
Banditry and rookery is an option, and an interesting one, as is mercenary basing.
You're right, I think, that the goods would have to be valuable for anything other than local trade. If the city is being abandoned because some resource has run out - mining is the most obvious example, but it could be water - then trickling out some of the same is probably fairly acceptable. Shipping stone to locals in a limited fashion would have a limited impact - it's expected, and may be the method by which the locals are bribed.
Of course, this assumes the covenant has an adequate supply of Terram vis and a sufficiently efficient spell to generate the stone, otherwise the stone is too expensive.
Old Sarum is just the inspiration and example. The concept is of a dying city taken over as a new covenant.
However, yes, that's pretty close, less than an hour's walk between the two cities.
If the magi are not in a hurry, they may be able to isolate the old city, reroute whatever road traffic passes by, possibly by moving the roads, shroud it as mentioned, and over time the old city may simply become an apparently mostly abandoned ruin. There are covenants in thriving cities.
However, possibly the emphasis on secrecy is too much. Maybe the magi just quietly, not secretly, take the place over, dispense various inducements, and settle in. As long as the locals get their stone, the nobles get some goods, and the Crown gets its grease, and the magi are not obnoxious, the locals may not care much. The secrecy is not so much in the magi's presence, as their extent and activities.
Those seem good twists for Old Sarum: the site may indeed have a Mithraeum, or a shrine to some other Roman god, possibly Mercury, or some other pre-Roman feature, or perhaps a Saxon magical feature. The same or similar can apply to most places in Europe, if another location is preferred.
The difficulty with such a scenario is typically that hermetic magic has a difficulty producing new magical auras, and tends to rely on existing ones. Existing ones tend to naturally occur where geographical features are exceptional, or where ancient magic was found. If there's a mithraeum, then yes, you may have an aura to use for your covenant, but in a city, it's unlikely that geographical features are also present, so you're likely to end up with a relatively weak aura if you use the tether system from RoP:M.
A purely Preternatural Tether Magic Aura isn't bad in the long run if there is no abutting Divine or Infernal aura. Eventually it will raise to Preternatural Tethers 5 and can support a Magic Aura of 5 or 6 with magical activity. However getting it there is something that will take a long time (decade on average best case, centuries worst case), cost a whole lot of Vis, and has lots of YSMV decisions even going exactly by the published rules.
Not something to depend upon unless it was discussed and agreed upon before the beginning to the Saga.
In the Egypt book there is a ritusl of i think Shadowed Glen. I'm imagining the players creating the equivalebt of a "notice me not" ritual that makes the place seem ruined even as its thriving. Non Gifted and non-aware see ruins and feel a need to get away. Those in the know see the covenant as it truly is.