You will need saws, shovels, and axes to free up space for new town expansions. There are several ways to get them:
1. Send out trains loaded with goods. Trains may bring you tools along with the usual construction materials.
2. Make sure to visit the market. It has special deals on tools every once in a while.
3. Open treasure chests. They can be found in the mine or your friends' towns, brought by ships from the islands, and given as a reward for sending fully loaded airplanes.
4. Play at the House of Luck to win tools as prizes.
5. Take part in weekly regattas. You can get tools as rewards for strong finishes.
6. Use Township Cash to buy any tools you need.