Colony Capital - The Company that owned the property before the pop legend's death in June 2009 - want to transform the 2,800 acre Californian estate into an institute to teach talented youngsters skills across a variety of musical genres named after Michael.
According to gossip website TMZ, the company want to model the institute on prestigious performing arts school Juilliard - which teaches dance, drama and music to undergraduate and graduate students - in New York City.
Before any work can start on the building, Colony Capital need Santa Barbara County to approve the plan and Michael's estate have to give permission for the 'Thriller' singer's name to be used.
A representative for the estate said: "It's an interesting idea. And we'd be open to it."
The eccentric pop star bought the property in 1987, with the intention to turn it into a "paradise for children".
After installing a parade of fairground rides and a zoo, which included elephants, snakes, giraffes and llamas, Michael opened up his fairytale home to children.
However, the King of Pop abandoned the fantasy home after being accused of child molestation in 2003. He was acquitted of all charges following a harrowing court case in 2005.