Tax Exempt Bonds
Support CMS Expansion

September 17, 2007
| By Pete Daly |
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KENTWOOD — Retail display manufacturer Creative Merchandising Systems (CMS) is building a new plant with the help of $3 million worth of tax exempt bonds approved by the state of Michigan.

CMS founder and CEO Donald S. Smith said the new plant under construction at 4044 Brockton Drive SE in Kentwood will total almost 75,000 square feet and may ultimately bring the company's employee roster to 80. He said that about 65 people work for the company, which has a 26,000-square-foot manufacturing plant at 4053 Brockton.

According to an announcement by the Michigan Economic Development Corp. in August, the state's Private Activity Bond Program was used to allocate $3 million in tax exempt bonds to help finance the expansion of Twin Birch LLC in Kentwood, which will lease the new project to Creative Merchandising Systems.

The bonds will be issued by the Michigan Strategic Fund, which is chaired by James C. Epolito who is also president and CEO of the MEDC. The bonds will finance acquisition of the land and the construction, plus about $500,000 worth of machinery.

Private activity bonds are issued to finance projects for manufacturers and certain nonprofit corporations, according to the MEDC. The Michigan Strategic Fund acts as an intermediary between a borrowing company and lending party to lessen the cost of borrowing, because the interest paid to the bond buyer is exempt from federal, state and local taxes.

An MEDC spokesperson said the interest rate on the bonds should be about two-thirds that of the prime interest rate, which was 8.24 percent in late August.

"Creative Merchandising Systems is typical of the companies that contribute without fanfare to the sustainability and growth of West Michigan," said Kentwood Mayor Richard L. Root. "Small and medium-sized manufacturing companies such as Creative, led by visionary owners, are exactly what being 'open for business' is all about."

According to information compiled by the city of Kentwood Economic Development Department, CMS was started in Ada in 1990, supplying local companies such as Spartan Stores, Meijer, D&W and Family Fare with display fixtures for bakery, produce, wine and floral products.

The company has expanded significantly; today its retail display products are sold throughout the United States, Canada, the Caribbean and South America

Smith would not divulge the most recent CMS year-end sales total.

"I will tell you we have tripled in the last couple of years," he said.

The company specializes in high-end wood displays for companies such as Target, Kroger and Spartan Stores, said Smith.

According to other reports, the company's most recent growth was on the West Coast, particularly California and Oregon, and it has recently signed new customers that include TJ Maxx and Borders Group Inc.

In its application in February for an Industrial Facilities Tax Exemption Certificate, CMS indicated it employed 48 people and expected to increase employment by 11 within two years of completing the expansion project.

The city of Kentwood would forgo approximately $5,439 in IFT property taxes in 2007 as a result of the abatement, according to Kentwood Economic Development Planner Lisa Golder.      

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