On a muggy, overcast Halloween night in 2013, the lights went out at Backspace, an all-ages club in Old Town.

In a city with few places where kids can watch live music, the sweaty coffeehouse defined Portland's underage music scene for six years.

The club's closure left a void that hasn't been filled by any venue since. Local music luminaries mourned the club's demise. "Backspace was huge for my generation of musicians," says Bim Ditson, drummer for the group And And And. "It wasn't just a big deal locally, it was known nationally as a hub for all-ages shows."

What most people didn't know: Backspace closed because of a crackdown by City Hall demanding that more than a dozen nightclubs install new sprinkler systems.

Now, WW has obtained details of an extraordinary state investigation shedding new light on the circumstances behind the closure of Backspace and another club.

An investigator for the Oregon Building Codes Division is unambiguous in his conclusions: By enacting a 2013 sprinkler ordinance, the city broke state law, unfairly forced business owners to spend hundreds of thousands of dollars, and ultimately put two nightclubs—including Backspace—out of business.

"Many property and business owners paid from two to five times the city's [cost] estimate, resulting in costs for some businesses approaching $100,000," says a report obtained by WW on the state investigation. "At least two shuttered their doors, citing the costs of compliance with Portland's ordinance as the reason."

Portland business owners often bemoan heavy-handed regulation by the city—but the investigative report presents a new twist: A state agency is accusing the city of knowingly breaking the law in its zeal to regulate nightclubs. The investigation is nearing a conclusion just as a new fire chief, Mike Myers, takes over the city's second-largest bureau.

The report reaches damaging conclusions about the city's actions:

• City officials knew they lacked the legal authority to require nightclubs to install sprinklers, yet chose to bypass the steps that might have allowed such a code change. "Portland was keenly aware of this procedure but chose to ignore it," the report says.

• They made the change without first notifying the club owners, despite mandating costs that would run to hundreds of thousands of dollars. "The very individuals who would be most affected by the ordinance received no advance warning," the report says.

• Having enacted the new rules, the city enforced them selectively, forcing some clubs to comply immediately while turning a blind eye to others. "The city treated similarly situated businesses differently," the report says.

City Commissioner Dan Saltzman, architect of the city's 2013 sprinkler ordinance, says the state investigation is way off base. He strongly defends his decision, saying it was a "fundamental issue of public safety" and not an overreach.

"I thought it was the right thing to do then," he says, "and I still think it was the right—and legal—step to take."

Duke’s Country Bar (Emily Joan Greene)
Duke’s Country Bar (Emily Joan Greene)

In 2013, Mayor Charlie Hales put Saltzman in charge of Portland Fire & Rescue. Saltzman's first act: proposing a new sprinkler requirement.

City code at the time said that any new nightclub with a capacity of 100 or more had to have a sprinkler system—but older clubs that opened before sprinklers were required were grandfathered in, meaning they could operate legally without them.

Saltzman wanted to change that. His ordinance required all nightclubs serving more than 100 patrons to have sprinkler systems, regardless of when they opened. The new rule would impose significant costs on some clubs.

Saltzman says no specific incident in Portland moved him to propose the change, just his general sense that nightclubs without sprinkler systems were dangerous.

In the summer of 2013, Saltzman's office began communicating with Fire Marshal Nate Takara about the commissioner's desire for sprinklers in nightclubs.

But that plan immediately encountered a legal hurdle.

In an email to a Saltzman aide, Takara pointed out that unless a nightclub made structural changes that increased its occupancy, it only had to comply with whatever building code requirements were in force when it began operating.

"Since these businesses were legally permitted," Takara wrote, "Portland Fire & Rescue has no authority to require retroactive fire sprinklers in these businesses unless modifications are made that increase occupancy load."

So the city set about adding to its authority.

In preparation for briefing the City Council, then-Fire Chief Erin Janssens emailed Takara seeking information to include in an FAQ document.

"What public outreach was performed on this regulation?" Janssens asked.

"None," Takara replied.

At a Sept. 4, 2013, council hearing on the sprinkler ordinance, Janssens talked about decades of nightclub fires all over the world and presented a brief video of the 2003 Station nightclub fire in West Warwick, R.I., which left 100 people dead at a Great White concert.

"The fire has spread exponentially now at this point," Janssens told the council, apologizing for the graphic nature of the footage. "People are getting burned."

City officials were alarmed.

"I'm convinced one day we're going to convene as a City Council after a tragedy has occurred, and we'll do the same thing that I'm proposing," Saltzman said. "So I hope we can do it now and hopefully save some lives."

A week later, the City Council passed the ordinance unanimously.

After the vote, fire officials notified 14 nightclubs that they needed to install sprinklers within the next 16 months.

That was new information to almost all of them, since most were unaware the council was even considering a rule change. It was also an expensive proposition.

Jeff Plew, a partner in two affected clubs, Duke's Country Bar and Grill and the Dixie Tavern, quickly realized he would have to spend nearly $130,000 to install the sprinklers.

Plew says fire officials threatened him with fines and possible closure if he didn't comply in time.

"It's not right what they did," he says now. "I'm not some guy from Las Vegas rolling around in a three-piece suit. I can't afford this."

The new ordinance hit nightclub impresario Frank Faillace particularly hard. Faillace operates two Old Town clubs, Dante's and the Star Theater.

He tried to negotiate with the city for more time. Emails show his pleas were rejected.

"We either come up with the money and get it done, or we are out of business after December 31 of this year [2014]," Faillace wrote in an email to his landlord.

In an email to Takara, Faillace said he spent "close to $100,000 installing these sprinkler systems." He said he had to borrow the money, rather than pay for it out of operating cash flow, because Takara, the fire marshal, insisted the work be done by Jan. 1, 2015.

Philip Ragaway, the owner of buildings containing two eastside clubs, Biddy McGraw's and the now-defunct Alhambra Theatre, also faced a cash crunch.

He spent about $173,000 to install sprinklers in both buildings.

Ragaway, who has operated numerous nightclubs in Portland since 1993 and dealt with city and state regulators on numerous issues over the years, tells WW he's never experienced a jolt as unexpected and unaffordable as the sprinkler ordinance.

He says the cost of the new sprinklers forced him to raise the rent at the Alhambra Theatre from about $4,000 to about $7,000 a month—which caused the club to go out of business.

"The moment I put sprinklers in, the rent had to go up," Ragaway says. "My tenant was already behind and he couldn't afford the sprinkler cost, so I had to pay and lost the tenant."

At least one club on the city's list escaped the costly renovations. Silverado, a gay bar and strip club downtown, was informed by the city that it had to install sprinklers.

Tom Breazeale, owner of Silverado, told an investigator he obtained bids for a sprinkler system that would have cost about $100,000 to install but that the city never responded to the plans he submitted for a permit.

"Silverado never has installed the system and has never received a letter or a fine," says Dixie Tavern owner Plew. "I think it's unequal enforcement." (Breazeale could not be reached.)

Duke’s Country Bar (Emily Joan Greene)
Duke’s Country Bar (Emily Joan Greene)

On Sept. 18, 2014, records show, the Oregon Restaurant and Lodging Association approached the state Building Codes Division to complain about Portland's new sprinkler ordinance.

As its name suggests, the Building Codes Division sets statewide standards for residential and commercial structures.

Agency director Mark Long met with a representative of the city attorney's office to discuss whether the city had the authority to force nightclubs to install sprinklers. The meeting did not go well.

On Jan. 28, 2015, Long told the city attorney in writing he had "reason to believe that Portland's ordinance may not be in conformance with Oregon law," and said his division was opening a formal investigation.

Oregon law prohibits cities from imposing rules that conflict with state building code. Yet Portland had done just that.

The Building Codes Division began a formal investigation conducted by an employee named Adam Blechman. WW obtained a copy of Blechman's report, which is dated April 14, 2016.

As he began gathering documents from the city, including emails between fire officials, Blechman soon found evidence that city officials had known they were on shaky ground.

Takara, the city fire marshal, had sent emails in 2013 to the state Fire Marshal's Office in which he acknowledged that the city needed permission from the Building Codes Division before making any changes to the sprinkler code.

"Takara acknowledged that existing structures cannot be required to add sprinkler systems," Blechman writes in his report. "The state building code cannot be modified by a local jurisdiction."

But the city never sought nor received such permission.

"Portland was keenly aware of this procedure," Blechman writes, "but chose to ignore it."

Silverado, a strip club in Old Town, submitted plans for sprinklers but never heard back from the city. (Thomas Teal)
Silverado, a strip club in Old Town, submitted plans for sprinklers but never heard back from the city. (Thomas Teal)

Today, the city of Portland and the Building Codes Division are at an impasse.

Portland Fire & Rescue spokesman Lt. Rich Chatman says Fire Marshal Takara cannot comment because of the division's continuing investigation.

"The fire marshal acted out of a desire for public safety," Chatman says. "There was no intention to be punitive."

Building Codes Division officials also declined to comment on the case because it remains unresolved.

In the conclusion of his report, however, Blechman lays out recommendations for next steps, including assessing penalties against the city and suing to compel it to cease enforcement of the 2013 sprinkler ordinance.

Sean O'Day, general counsel for the League of Oregon Cities, says it's rare for a state agency to sue a city. "In my experience, it is not common," he says.

Saltzman says he's aware of the state investigation but was not interviewed for it. He says he's convinced the sprinkler ordinance was the right step, and that it has made club patrons and employees safer.

"There have been tragedies around the country and around the world," Saltzman says. "I wasn't going to have a tragedy on my watch when I had the authority to do something."

Although Saltzman says he's confident the city's legal position is sound, the club owners who collectively spent hundreds of thousands of dollars are not so sure.

"There are more than 100 school buildings in this city that don't have sprinklers or meet seismic code," says Ragaway, the landlord of Biddy McGraw's. "There are churches and nonprofits the city doesn't go after. When I complain, they say, 'Just raise the price of your drinks.' It doesn't work that way."