Once a cog in the gears of the Industrial Revolution, the Sawtooth mill building in Apponaug is being eyed as the future home for municipal offices and an engine to revitalize the village.

Members of the City Council met with Mayor Frank Picozzi, the Planning Department and the top brass from AAA Northeast Thursday afternoon to unveil a proposal to lease about 32,000 square feet of the 37,627-square-foot building as municipal offices for 15 years with an option to buy at fair market value. The lease would have two five-year extensions, including options to buy the building at fair market value.

AAA bought the former mill building at auction from the state in 2018 for $875,000 with the intention of relocating its Centerville Road branch office. That plan was later expanded to include a call center. Then the pandemic hit.

Even before taking office, Picozzi questioned what to do with the City Hall Annex, which was closed in January of 2018 after a frozen water pipe burst and municipal offices were hastily relocated to the vacant Greene School. Under the administration of Mayor Joseph Solomon, the offices were relocated to a repurposed Buttonwoods Community Center.

Picozzi wants to consolidate offices near City Hall. He looked at revamping the Annex, an option that was ruled out when engineers determined the building is structurally unsound and couldn’t be insured. Demolishing the annex and building anew is projected to cost $26 million. The plan is to demolish the annex and leave the land vacant as possible uses are explored.

Meanwhile, AAA moved ahead with restoration of the mill building, replacing windows, re-pointing the brick exterior, replacing flooring and adding a new roof. By this time last year, the bones to the mill building were fully restored, its shining façade a gateway to Apponaug. Picozzi thought it could be an ideal place for municipal offices.

It was serendipity.

As AAA Northeast President and CEO John Galvin said Thursday, the pandemic prompted a change in plans. The call center was shelved and possible uses were being considered in a residential build out of the second floor.

The city Planning Department followed up on Picozzi’s suggestion. AAA still plans to relocate its Centerville Road office to the mill, but it wouldn’t be using the rest of building.

“We bought [the building] with the intent of being here,” said Galvin.

‘Not trying to make a profit’

Galvin said AAA looks to be a community partner. The lease is “intended to be a real good deal … we’re not trying to make a profit on the city.”

City Planner Bruce Keiser and planner Lucas Murray find the financial aspects of the lease highly favorable.

Lease terms call 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.

Kevin McKeown, AAA director of facilities, said the solar would offset city energy costs. Geo heat pumps would be used for heating and cooling.

The city engaged MG Commercial Properties to do a comparison analysis of the AAA lease to the market. The conclusion is that the $15.73 per square foot “is well below what the space would command for a lease on the open market.” The market rate was pegged at more than $22.50.

Annual lease payments would start at $477,903 and total $8,156,957 over 15 years.

Comparatively, according to a report prepared by C.A. Petzer Associates, if the city were to renovate the existing annex, which it advised against doing because of defects, it would cost $11 million to $16 million. That option would require bonding that would require voter approval and result in interest costs and added fees. The all-new option would even be costlier. It is estimated it would take three to five years to deliver an all-new building, whereas if the city approved the AAA lease, the space could be available by January 2022. Keiser said Monday AAA has an architect lined up as well as contractors to start the build out as soon as an agreement is in place.

Vote set for Monday

Picozzi doesn’t want to delay. He has built in half the cost of a first year lease into the budget he forwarded to the City Council this week. Knowing that would be questioned, he thought it best the council have the opportunity to see the building, get the full story, ask questions and vote on the lease now.

City Council President Steve McAllister will bring up the lease under unanimous consent at next Monday’s meeting. McAllister likes the plan to give city workers Class A office space and consolidate offices in Apponaug. The build out of the mill would include a community meeting room that McAllister fought to reopen when annex offices were relocated from the Greene School of Buttonwoods.

“I’m excited by this. It really is a great deal,” McAllister said Tuesday. He called the building a “unique opportunity” to centralize offices in Class A office space near City Hall.

There will be parking for 132 cars between lots on the east and west sides of the building. Designs call for a sky bridge from the higher elevation east lot off Greenwich Avenue to the second floor of the mill.

Keiser said Monday he sees the consolidation of municipal offices as offering “one-stop-shopping” to the public. He finds the proximity to City Hall a plus and the fact that it will be Class A office space as a “point of great pride to the city” and a demonstration of the fact that the city takes pride in its workforce.

From a financial aspect he called the lease “cost effective” and a saving over either attempting to renovate the existing annex or building a new one. Asked why he thought AAA is offering such a favorable lease, Keiser pointed out AAA is not in the real estate business and is looking to deal with a single, stable tenant and there is no tenant more stable than the city.

The Sawtooth mill 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 Sawtooth 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 was the last vestige of the once prosperous mill and major employer in the village.

In addition to the Sawtooth building, AAA also bought in 2019 the historic Caleb Greene Homestead on Centerville Road for $275,000. At the time, AAA planned on using it to house out of town visitors doing business with AAA.

Now, AAA is offering the house to the city at no added cost to the lease. Keiser said AAA has also offered at no added cost to make renovations to the building.