The Impact of Abt on Morton Grove's Budget

In 2004, the Village of Morton Grove for the first time began charging for garbage collection, angering residents and sweeping in new Caucus trustee candidates in the April 2005 elections, who promised to try and change that and cut other newly implemented taxes.

But when they got a look at the financials, former trustee Georgianne Brunner said, "It was like 'What did I get myself into?'"

A full five years before the housing crash and recession kicked in everywhere else, the village was in the midst of a pre-recession of sorts, caused when Abt Electronics and Appliances pulled up stakes and moved to Glenview in 2002.

With that business went $1.6 million in sales tax revenue -- a full 30 percent of Morton Grove’s annual sales tax and 10 percent of its annual revenue.

“These other cities were fat and sassy and have had to learn to cut back,” Mayor Dan Staackmann said of the recent recession.

“We’ve been living with this so long [that] we knew what to do.”

The Abt episode – why it happened and what the village did about it, helps illustrates the challenges Morton Grove faces as it continues, almost 10 years later, to try to attract and retain businesses and to do more with less.

Why Abt left Morton Grove

Beginning as a mom and pop radio shop in Logan Square in 1936, Abt Electronics and Appliances has grown into a retail colossus.  According to co-owner Mike Abt, the company sold more than $250 million last year in televisions, cameras and refrigerators out of its new store on Milwaukee Avenue in Glenview.

Abt is the kind of retailer that small towns dream of luring to their community, and Staackmann said that he still hears from residents who blame the village for driving away Abt.

But the reason the company left is a structural problem – one that continues to restrain the village’s economic development efforts to this day.

Morton Grove’s 5.1 square-mile area* is triangulated on all sides by larger, more populous neighbors with bigger and more plentiful commercial spaces. Tilted heavily towards the residential, what commercial space Morton Grove does have tends to be small, like the mom-and-pop sized storefronts along Dempster Street.

Like many national retailers that are expanding, what Abt wanted was big-box. Very big box.

The store came to Morton Grove in 1988, having outgrown a store it had expanded “10 or 12” times in Niles, Abt said. That same year it began selling online at abt.com and the business grew exponentially. Fourteen years later, after two expansions at its Morton Grove store, Abt wanted to build a megastore.

“We were landlocked and we were bursting,” Abt said. “We needed more showroom space, more warehouse space, more parking – more everything.”

And Morton Grove didn't have anywhere to put it.

The largest available commercial lot in Morton Grove right now is 3.5 acres, accourding to Community Development Director John Said. The new Abt store and its 1,000-space parking lot covers 37 acres.

"We felt bad because we knew it would hurt," Abt said.

“They did everything they could,” he said of village officials, but they couldn’t create land, and that’s what we needed.”

Glenview, the northerly neighbor more than three times the size of Morton Grove, landed Abt and now it’s Glenview's largest single retailer. 

A Hole in the Budget

Abt left a substantial hole in Morton Grove’s budget, one the city filled in the first year with a one-time rebate of economic development money from Abt.

But going forward, the village needed to make up the revenue -- and fast -- so it increased taxes and user fees.

Among the more contentious things the village did was to begin charging people for trash collection, a service previously provided free of charge.

Morton Grove raised the sales tax .25 percent and created new gas and restaurant taxes. Ambulance fees also went up.

The response to Abt has become a blueprint for leaner budgets: Pare back services and add user fees and taxes when necessary.

On Tuesday, a bit of a breather: Real estate sales rescues the budget briefly, but overdue pension obligations and a second recession kick in.

*Correction: We originally wrote 5.1 acres, not square miles.