America for sale? Michigan town near Ohio could become ‘China City’

The southeastern Michigan city of Milan, a 40-minute or so commute to Toledo or Detroit industrial centers, might become the new home for a 200-acre or larger “China City” that would house Chinese business people.

Milan, a city of 6,000 surrounded by farm fields, is the locale for an unusual deal in the industrial heartland as the rocky relationship continues between the People’s Republic of China and the United States.

A group of mainland Chinese known as Sino-Michigan Properties LLC paid $1.9 million for 200 acres of farmland on Milan city limits in purchases this year and in 2011, according to local officials and property records.

Milan (pronounced MY-lan) is located on U.S. 23 a half-hour from the Ohio border and a short drive from the University of Michigan in Ann Arbor — a destination favored by Chinese students.

The city straddles the border of Wastenaw and Monroe counties and is best known regionally for the Milan Dragway race track and a federal prison that can be seen from the highway.

The investors intend to build a 415-unit housing complex complete with artificial lakes and up to 6,000-square-foot homes, as well as a cultural center, Michigan officials briefed on the project said.

As yet, the project hasn’t been formally reviewed by two townships that must approve it, and questions abound.

A presentation last month to the Milan City Council by the city administrator said the project “would be marketed to Chinese business people who want to start companies in the United States,” reported the Milan News Leader newspaper.

Attorney Arthur Dudley II, of the Detroit firm Butzel Long, the registered agent for Sino, declined comment.

He also declined to put a reporter in touch with the investors. “I can’t comment on anything about that,” said the attorney, who in 2008 was selected by Crain’s Detroit Business as a top-three finalist for “Deal Maker of the Year.”

But Doug Smith, senior vice president for business and community development for the Michigan Economic Development Corp., met with the investors.

“It’s a group that wants to build a China city, starting with housing over there in Milan,” Smith said.

A veteran of efforts to attract Chinese investment who led a trip to China last year with Michigan Gov. Rick Snyder, Smith said proximity to the auto industry is a potential plus for the group, as is closeness to the University of Michigan. “One of the big reasons they come here is to put kids in school,” he said.

Smith also noted an uptick in interest by China to locate factories in the U.S. to avoid tariffs and transportation costs.

“If they want to be in the American market, they have to have manufacturing here. They want to get out ahead of that,” Smith said. Local Michigan township approval awaits action and will require much more information if it is to happen, said township and Milan city elected officials.

Phil Heath, 57, Milan Twp.’s supervisor since 2008, said he has more questions than answers at this point, such as how local schools could handle the influx.

“People got questions, people want answers. It will be an interesting topic for the next six months. I hope somebody comes up with some answers and facts. All I know is they want to propose this development. There is a pretty little map and that is where it ends,” Heath said.

Milan Mayor Kym Muckler, who said she has not met with the project principals, said she understands the deal to be from “a conglomerate” of Chinese businessmen who paid cash.

Muckler, a former reporter at the local newspaper, said approving the project requires extending water and sewer from the city to the township.

How natural wetlands on the property are handled could also be an issue.

“Township residents have many concerns with this project,” Muckler said. “I have my concerns and many are the same that the folks in the township have. The political climate is sensitive — we are the city and have services, but townships are where the land resides.”

Analyst Thilo Hanemann of the research analysis firm Rhodium Group, a close tracker of Chinese business activity, said he’s never heard of anything similar to the Milan proposal.

“I have not seen a project of this large scale targeting Chinese businessmen,” he said. Real estate inflation in China is pushing investors to low-cost places to place money, he added. “You can be sure the price of property in Shanghai is a multiple of what it is in Michigan.”

There have been no meetings, or hearings, or any other official action scheduled on the project, London Twp. Supervisor Barb Henley said Wednesday. “My only question is, ‘Why Milan?’ ”

Concluded township supervisor Heath: “In this economy, it’s unusual for anybody to say they want to build something.”