Sale of Willow Run site to center for driverless car testing could close next summer

A conceptual rendering of the planned American Center for Mobility at Willow Run in Washtenaw County. It is slated to open in 2018, but funding remains uncertain. (Courtesy of Michigan Economic Development Corp.)

The sale of more than 300 acres at a former World War II bomber factory in Washtenaw County for use as a testing hub for connected and driverless cars could close by next summer, those involved with the purchase told Bridge and Crain’s Detroit Business.

Yet even as developers of the planned American Center for Mobility at Willow Run in Ypsilanti Township move ahead with buying property, significant hurdles remain — namely, funding — before the estimated $80-million car facility can open.

News last week that the center’s property acquisition entity, Willow Run Arsenal of Democracy Landholdings LLP, has agreed to pay $1.2 million for the 311-acre Willow Run site is a milestone for supporters of the mobility project, which has an expected opening date of 2018.

Two other perspectives from the conceptual rendering of the planned American Center for Mobility at Willow Run in Washtenaw County. (Courtesy of Michigan Economic Development Corp.)

Beyond standard due diligence, including inspections and approvals, the specific conditions required for closing have not been made public. The Michigan Economic Development Corp., which has an ownership stake in the project and is helping to negotiate the transaction, would not release the purchase agreement publicly nor share the terms, citing confidentiality agreements.

The American Center for Mobility project is pegged to need about $60 million from the federal government. CEO John Maddox would not comment last week on the status of fundraising, saying: “A lot (is) up in the air.”

He has said, however, that his team is targeting the U.S. transportation, energy and commerce departments for funding. That likely could include multiple requests in the form of grants or budget allocations, either from the executive branch or Congress, Maddox told Crain’s at the Detroit Regional Chamber Mackinac Policy Conference in June.

The mobility center, as proposed, will include a 2.5-mile highway loop for developers of connected and autonomous vehicles to test their cars at freeway speeds; a grid simulating urban streets, with intersections, buildings and pedestrian crossings; and buildings where the site’s operations will be based, Maddox said.

The MEDC has committed $3 million to the Arsenal of Democracy landholding entity for the property purchase and startup costs. Maddox’s team is seeking an additional $17 million from the agency’s Michigan Strategic Fund, though a spokeswoman said she did not know when the project will come back before the board.

An MEDC staff memo from March said developers planned to return with the remaining funding request should the property purchase happen “as anticipated.” That request also would require an operational budget and a site plan for development, the agency wrote, along with a recommended payback schedule for the state investment.
The MEDC said then that state funding would be used “as leverage to finalize federal investment.”

Lining up next steps

A section of the former Willow Run bomber factory and General Motors Co. powertrain plant that is slated to become the American Center for Mobility. (Courtesy of Michigan Economic Development Corp.)

The MEDC and Revitalizing Auto Communities Environmental Response Trust, or RACER Trust — the trust handling cleanup and redevelopment of former General Motors Corp. plants in Michigan after the automaker’s 2009 bankruptcy — said the deal could close in the third quarter of 2017, though it could be sooner depending on how quickly developers can lock up necessary approvals and financing. RACER Trust has owned the Willow Run property since 2011.

Assuming that happens as planned, developers could be ready to request construction bids as soon as the deed is in hand, Maddox said.

“RACER is confident that the underlying use for the property has a very compelling business case, and we are confident that the buyer and developer team ... are absolutely the right team to get it done,” said Bruce Rasher, RACER’s redevelopment manager.

Willow Run Arsenal of Democracy Landholdings is a limited partnership created in March to handle the property acquisition. Its owners include Willow Run Land Management Services, a nonprofit corporation registered with the state, and the Michigan Strategic Fund, which bought an equity stake as part of its $3 million funding award in the spring.

Once it owns the property, the landholding entity will lease the site to the American Center for Mobility, which is a separate nonprofit corporation.

“We are ecstatic about this development because the American Center for Mobility will give Michigan a cutting edge in this new technology,” Rasher said. “It’s important not just for the township of Ypsilanti and Wayne and Washtenaw counties, but all of Southeastern Michigan, because the world’s largest concentration of automotive R&D and engineering resides here.”

In the meantime, developers say they can move forward with designing the site now that they have a formal purchase agreement with the state and RACER Trust.

They have hired a Detroit-based civil engineering consulting firm with mobility chops: The Mannik & Smith Group Inc. also helped design the 32-acre Mcity test bed at the University of Michigan.

Ideally, said Maddox, the mobility center CEO, in addition to freeway speed testing the center could provide a place for automotive experts to focus on drafting voluntary standards for the industry — separate from the rules expected to come from federal regulators — and test their ideas on-site.

Maddox said the purchase agreement will allow his team more direct and frequent access to the site to speed up land surveys, which will be used for site design and to create 3-D computer models that will simulate the facility in different weather and daylight conditions.

Mannik & Smith landed a contract worth up to $150,000 to work on the project, company executives said. Maddox said his team is in talks with two other firms that specialize in intelligent transportation system design and project management, though he declined to name them because they are not yet under contract.

Mannik & Smith is working with the American Center for Mobility and the Michigan Department of Transportation on both site design and to address right-of-way issues near the intersection of U.S. 12 and Wiard Road in order to build the highway loop portion of the project, said Sean Kelley, a senior vice president and principal with the firm.

Kelley said he expects that work on a detailed design will begin soon with increased access to the property. The project likely will be built in phases, with the highway loop section coming first, he added.

Project design is scheduled to last at least through the end of the year.

“Certainly, we would want to break ground on our facility construction as soon as possible after the final sale date,” Maddox said.

Still cleaning up site

RACER Trust will continue ongoing environmental cleanup to prepare the site for development. RACER received close to $500 million when it was created in federal bankruptcy court for its work on old GM plants across the country; its budget for Willow Run is $35.8 million, of which $5 million has been spent, according to trust officials. The trust also worked to identify the location of utilities, some of which date back decades and had not been properly documented, Rasher said.

Investment banking firm Stout Risius Ross Inc., which has a Southfield office, was hired to appraise the property and determined the $1.2 million figure that became the purchase price, Rasher said.

The ultimate scale of the project is unclear. The American Center for Mobility has been described as a 335-acre site, yet the RACER Trust property to be sold is 311 acres. RACER administrators and Maddox couldn’t explain the discrepancy. Maddox said developers “fully intend” a 335-acre footprint.