EAST LANSING — As U.S. troops prepare for their final withdrawal from Iraq, a consortium of Michigan companies is eager to make the American presence felt in a different way by overseeing the building of a new city near Baghdad that draws on the skills of Iraqi immigrants living in Michigan.

Officials from the National Investment Commission of Iraq said Tuesday that they’ve signed a memorandum of understanding with the consortium to plan and build a new city on the outskirts of the capital where 500,000 people could live, shop and work.

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The agreement gives the consortium what it needs to take the next step — raising the $5.5 billion needed to build the city from banks and private investors to get the project under way by late 2012.

Although much of the building is expected to be done by Iraqi workers, Michigan companies could win as much as $1.5 billion in contracts for planning, construction, engineering, project management, green energy development and procurement, according to Pat McRae, who recently returned from discussions in Iraq on the project.

“Our ability to bring Michigan companies to the table for planning, engineering and sustainable energy expertise has been vital — but we have more work to do,” said McRae, director of international programs for the Prima Civitas Foundation, which was started by Michigan State University to help find new ways for the Michigan economy to grow.

Raising the money to build the city is just one of many hurdles the consortium will face. No one is quite sure what the security situation will be after U.S. troops withdraw at the end of this year, and negotiating the convoluted Iraqi bureaucracy can be difficult.

But those working on the project are eager to provide housing for ordinary citizens who have gone through significant hardships during the nine-year war. Officials emphasized Tuesday that this is the end of just the first of many phases to build the new city in Iraq, where housing is scarce since no new housing has been built in decades.

“There is a large, extremely skilled community of expat Iraqis living in Michigan,” said Steve Webster, CEO of Prima Civitas, which has helped the consortium, MICH Development, with funding and expertise. “They make up a large number of the architects, engineers” and others who have been drawing up plans for the proposed new city.

The consortium includes more than 20 Michigan firms involved in architecture, engineering, construction and finance. Many already have international experience, and some employ Iraqis who have moved to the U.S.

Among them are: ICON (Birmingham); a consortium of Saroki Architects (Birmingham), Albert Kahn Associates, Inc. (Detroit), and Mannik & Smith Group (Detroit); Capital Strategies Group (Birmingham); C2AE (Lansing); and the Archinomics Group (Winnetka, Ill.). More information on MICH Development is available at www.michdevelopment.us.

The opportunity to work on the project came from Sami Al-Araji, a Michigan State graduate who heads the Iraqi Investment Commission. He approached MICH Development about the opportunity to create jobs both in Iraq and in Michigan, where the jobless rate remains above 10 percent.

“It’s a commitment to training people there. It’s a commitment to building high-quality housing. It’s a commitment to having a supply chain here that happens to have Iraqis” in it, Webster said.

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He envisions Michigan companies such Alpena-based Besser, which already supplies concrete products worldwide, and Taylor-based Masco, a home furnishing supplier, bidding to do some of the work on the massive project.

The National Investment Commission has signed memoranda of understanding with fewer than 10 consortiums, so MICH Development already has cleared a lot of hurdles just getting to this point.

But the new city won’t get off the ground without private financing. And a lot remains to be done to get companies and workers in Iraq involved. The jobs created in Iraq are intended to give workers there enough money to buy housing in the new cities which are being drawn up with space for schools, mosques, commercial areas, restaurants and other amenities. The housing is targeted to the middle class, mainly government workers, not refugees. Housing for the 1.3 million refugees living in Iraq is being discussed, but that’s a separate issue from this project, foundation officials said.

The consortium and foundation hope companies will hear about the project and see an opportunity to help themselves and rebuild Iraq.

“We’ve heard the phrase `boots to suits,’ McRae said. “As the (U.S.) military leaves, the soldiers must be replaced by business people. … We want to bring commercial opportunity to that region.”

Bill Kimble, President and CEO of the Lansing, Michigan based firm C2AE, said the MICH Development team put together by PCF provides a strong backbone to the project.

“We have aggregated substantial expertise in planned developments,” said Kimble. “If we can pull together the other components, this project will be important to many Michigan companies.”   Fay Beydoun, Executive Director of the American Arab Chamber of Commerce, said the MICH Development project will help show the people of Iraq that American companies are ready to invest in their nation.

“American Iraqis are eager to assist in this project, to help our nation and state as well as their homeland,” she said.

McRae said the fully developed project is planned to cover 15-20 square miles at a site approximately 10 miles from the center of Baghdad. The project will include housing, schools, commercial, recreational and civic components as well as other amenities for Iraqi families.

Copies of statements and additional information are available at www.michdevelopment.us.

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