Quote Originally Posted by Legio X
Straight from the FAQ:

"Q: As the Romans, why can't I build factional MICs in X area.
A: The Romans can only build factional MICs in areas that contain Roman units. The area expands based on the reform level (see below). During the Camilian Era, you can build factional MICs in your starting cities plus Segesta. During the Polybian Era, you can build factional MICs in "Homeland" regions (Italy). During the Marian & Avgvstan Eras, you can build factional MICs everywhere, but have limited recruitment, based on the area."

I believe the following holds true....

Type 1 government is mandatory for Polybian

Type 2 government is mandatory for Marian & Imperial
You are right. I had only type II goverment in Mediolanium. I need to destroy it and build type I to get the reforms.