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Re: Seismic Upgrade prob. W/97 UBC

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Fellow Engineers:  I need some level headed help on this one-

I find the new 1997 UBC has created a major "unforeseen" problem for us
while doing the design for a seismic upgrade of an existing building.

The building is a two story wood framed commercial building.  The
building has been recently purchased and they want to do an addition, as
well as change of use.  The new use is classified as a higher intensity
of use than the existing use.  Because of the addition, remodel of
existing structure, and the intensification of use, the building
department is REQUIRING that the building be brought up to current code
for seismic design, which is this case is the 1997 UBC.

This building was built in the early 1970's.  It has plywood sheathing
on the roof, floors, and walls.  There are shear walls with holdowns and
was designed fairly conservatively for seismic loads.  

The BIG problem is that the 1997 UBC says the horizontal diaphragms are
rigid, and forces are to be distributed to the shear walls based on
relative rigidity.  If I do the rigid diaphragm analysis, some of the
walls fail miserably, and the Owner is going to have to shell out some
major bucks to retrofit this building.  If I analyze the building with
flexible diaphragms, the upgrade costs are minor.  

I cannot in good conscious require the Owner to spend the money to
upgrade the building to make the shear walls figure for a rigid
diaphragm. Yet the building department is saying that it must conform to
current 1997 Code.  

I intend to go to the Building Official and explain to them that this
rigid diaphragm stuff for low rise wood frame buildings is a crock of
****, and try and get them to allow an exception to this part of the
Code.  I suspect that many of you will face a similar dilemma as you get
into this Code.  

I am asking what you my colleges would do in a situation like this? 
Would you just go along and make the Owner do the upgrade, challenge the
Building Official, or what?

Any comments are appreciated.