Mayor Frank Picozzi has been in the construction business long enough to know unexpected cost increases can send a budget into a tail spin.

But in his experience, he hasn’t seen anything like the rapid increase in material costs – assuming you can even get what you need – like he’s seen this year.

“Ed Ladouceur (Ward 5 councilman) knows what it is like; he can’t get what he needs,” Picozzi said explaining why the city is having difficulty getting contractors to bid on city work. In addition, he notes, contractors are faced with challenges in hiring personnel.

Picozzi said he is pleased to be out of the contracting business at this time. Yet he can relate to what is happening and isn’t one to sideline or scrimp on work in hopes that materials will become more readily available and prices will drop or at least stabilize.

So, when it became apparent that projected improvements to the Saw Tooth building in Apponaug, the future home of City Hall annex offices, would cost an additional $800,000, Picozzi didn’t put on the brakes.

Picozzi looked for ways for AAA Northeast that owns the property to trim costs including changing the fixtures, eliminating furniture, which would mean moving the older stuff now in use, and eliminating a bridge to the second floor of the former mill building from the ground level on Greenwich Avenue in the vicinity of the Apponaug hobby shop.

Picozzi discarded those alternatives reasoning if the city were to build the bridge, assuming AAA is agreeable, by charter the administration would be required to seek bids and the project would not only be delayed but likely cost more in the long run. The city would have to go through the same process to acquire the furniture.

As the 15-year lease, renewal for two 5 year increments and an option to buy at fair market value with AAA includes allowances for the bridge and furniture, the administration is seeking an amendment to the lease that will cover the unpredicted cost increases being faced by AAA without delaying the project. Initially, AAA planned to relocate its Centerville Road service office to the Saw Tooth by this fall and to have city office that will take up the lion’s share of the building – 32,000 square feet of 37,627 square feet - ready for occupancyby early 2022.

The lease approved by the City Council last May calls for $15.74 per square foot in the first year, increasing incrementally to $20.32 by year 15. The lease includes zero-interest cost rooftop solar, a build-out allowance of $1,883,000, a $698,500 tenant improvement allowance paid by AAA, and no restriction on tenant improvements for furniture, fixtures and equipment. Common area maintenance, including plowing, refuse disposal and repairs, is also part of the package.

The 15-year expense to taxpayers was projected at $8,156,957.

Prior to recommending the lease of the Saw Tooth building, the administration looked at the cost of rebuilding on the site of the recently demolished annex behind City Hall. That was projected to cost $26 million and assuming voter approval of a bond would take three to five years to complete.

Finance Director Peder Schaefer said Tuesday if approved by the City Council this coming Monday the annual lease payments would increase by $99,993 for the first ten years of the agreement.

AAA acquired the building at a state auction in 2018 for $875,000 with the intention of using it for a call center and service office. With the pandemic, call center operations moved to individual homes and the plan for a center was altered thereby opening the opportunity for the city lease.

The Saw Tooth was built in 1905 to accommodate a growing Apponaug Company textile printing and finishing mill. The mill complex closed in 1958.

Buildings were used for a variety of purposes including a moving and storage company and a boat rigging manufacturer.

The Saw Tooth building survived mill fires in 1961, 1966 and 1969 and then the Apponaug circulator project that took the mill water tower and People’s Moving and Storage Company. It is the last vestige of the once prosperous mill and major Aemployer in the village.