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Cities like Dundee and St. Paul may have to hire building officials or cede programs to other jurisdictions

SALEM — A new state rule prohibiting municipalities from using third-party inspectors to administer local building programs could jeopardize cities' and counties' ability to spur housing and economic development, city advocates say.

The statewide mandate could affect Newberg and Dundee, an examination of the legislation found.

Under the temporary rule — expected to become permanent — cities and counties will be required to either hire a building official or cede their programs to a larger jurisdiction with a building official on staff, such as a county or the state. Up to three cities are allowed to share a building official. The rule also boosts the certifications required to be a building official, and it requires jurisdictions to hire an electrical inspector.

"We entered into intergovernmental agreements with Dundee, Lafayette and Dayton back in 2009," said Doug Rux, community development director for the city of Newberg. "And we provide plan review and inspection previews for the three communities. The temporary rule says that a local jurisdiction can provide that for a total of two."

"I think a lot of folks are questioning pretty much everything about why the rule is necessary, how they can afford to comply and why they should have to when they haven't received complaints from builders," said Erin Doyle of the League of Oregon Cities.

Newberg has a sharing program with four cities and there is concern as how to handle this from a budgeting standpoint. The city's building division budget shows revenues collected from Dundee, Dayton and Lafayette to cover the inspection expenses.

"With this temporary administrative rule, the city of Newberg will have conversations with the other three cities and find out what the implications are to this new rule and what do the cities need to do in order to comply with the rule to be able to have certified building programs," Rux said.

The change was prompted by a 22-page memorandum issued in February by the Oregon Department of Justice, in which Assistant Attorney General Katherine Lozano concluded that relying entirely on third parties to conduct a building program violates state law.

The state Building Codes Division within the Department of Consumer and Business Services is the agency responsible for delegating the state's authority to approve building plans to cities and counties. Approving local building programs that depend on independent contractors to administer those programs would be unconstitutional, according to the memo.

It is legal for cities and counties to use such third-party services when the contractors are under the supervision of a building official, Lozano wrote.

Third-party contractors may continue to review and conduct inspections on behalf of cities based on lists of standards, statutes and rules. However, they are prohibited from issuing or denying building or electrical permits, issuing stop-work orders, resolving disputes or providing code interpretations, said Jake Sunderland, a department spokesman, adding those tasks need to be assigned to a building official on staff.

Newberg officials need to determine if because the city already has a shared agreement with three other cities, will it be allowed to continue. Another concern is whether the city can enter into intergovernmental agreements with other municipalities.

"It raises the question is there something in the Oregon revised statues because government entities can enter into intergovernmental agreements with other governmental entities," Rux said. "The question I have is is this administrative rule in conflict with Oregon revised statutes."

Leaders of municipalities with populations as small as 1,000, such as Aurora, said they cannot afford to hire a building official. Malheur County officials are considering adding positions for a building official and an electrical inspector to the county's next budget. But they are concerned they will be unable to attract qualified candidates to fill the positions, said Malheur County Attorney Stephanie Williams.

"We think it will be hard to obtain a building official, structural inspector and electrical inspector in Malheur County," Williams said. "We are not in close proximity to larger jurisdictions that might have those."

An estimated 25 jurisdictions rely entirely on independent contractors to operate their building and electrical inspection programs, said Mark Long, administrator of the Building Codes Division at the Oregon Department of Consumer and Business Services.

So far, the Building Codes Division has identified 14 specific cities and counties whose programs are up for renewal July 1 that may be out of compliance. More jurisdictions could be identified as division officials review their programs throughout the rest of 2018, Sunderland said.

The jurisdictions are Astoria, Dunes City, Estacada, Florence, Hood River, Josephine County, Lake County, Lakeside, Lebanon, Lincoln City, Malheur County, Phoenix, Reedsport and Veneta.

City officials in Aurora and Clatskanie have said their jurisdictions also are out of compliance with the new rule, but their programs are not yet up for renewal.

Some of the counties and cities have relied on independent contractors to operate their building programs for up to 30 years to save the expense of hiring a building official and, in some cases, to achieve greater efficiency. During that period, the state has repeatedly approved their building programs, city officials said.

Now, the state is giving cities a month to outline how they plan to come into compliance with the new rule by Jan. 1.

Several cities have been discussing whether to challenge the state's interpretation of the Oregon Constitution in court. If the courts found that the justice department's interpretation of the constitution is correct, it would require voter approval to change.

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