When city inspectors showed up to assess earthquake damage at an Eagle River home mid-construction, they discovered seismic damage wasn't the only problem on South River Circle.

The shifting earth during the Nov. 30, magnitude 7.0 quake had indeed damaged the home's foundation. But without drywall covering up the framing work, it became evident that the house itself was what building officials would soon label as "substantially deficient."

The earthquake, and the homeowner's subsequent request for a no-cost inspection by the Municipality of Anchorage, gave city code enforcers a rare look at a building site that but for the natural disaster would generally be beyond their jurisdictional reach.

"Basically we stumbled onto the situation when the prospective homebuyer requested an earthquake damage inspection by the MOA," Ross Noffsinger, Acting Building Official for the Municipality of Anchorage, told KTUU Wednesday. "As he (the inspector) is looking around the house, it becomes obvious to him that 'Wow,' structurally this thing is not constructed in accordance with structural provisions of the building code."

Noffsinger consulted with municipal attorneys and the mayor's office before deciding to revoke the builder's land-use permit for the site — a decision conveyed to Troy Davis Homes, a home builder in the Municipality of Anchorage and the Matanuska-Susitna Borough, in a three-page letter highly critical of what the inspectors found.

The letter, obtained by Channel 2, details the lack of a structural design plan for framers to follow, problems with shear walls — the walls that help a home withstand earthquakes and winds, — too few holdown anchors, and further describes on-site workers, including a private inspector, who "lacked basic knowledge in construction practices used to resist lateral loads from wind and seismic."

The city has asked the builder to hire a structural engineer for the job, create design plans, modify the house framing to incorporate all changes required by the structural design, and bring in a "qualified, independent third party structural inspector," according to the letter.

Citing "an obvious moral/ethical standard to adhere to," the letter also recommends a similar process for all homes constructed by the builder, regardless of where they are located "since all of south-central Alaska is subject to large earthquakes."

An individual who identified himself as the building supervisor for Troy Davis Homes, reached by phone Wednesday, declined to comment formally but did say the permit had been reinstated.

A review of online permit records and verification with the municipality's Development Services Department show that at the time of that call, and later in the day when this story published, the permit remained revoked.

Noffsinger said the builder is working with the city and the prospective homeowner on a solution. As soon as his department receives a letter from Troy Davis Homes committing to an agreed-upon process, the permit will be reinstated, Noffsinger said.

It's one example of what some worry is a more pervasive problem throughout the municipality.

"Since the earthquake struck Nov. 30, I've been inspecting homes in the Chugiak-Eagle River area. I've kind of purposefully done that to figure out how homes did out there because we don't have formal planning review," Jake Horazdovsky, an Anchorage-based structural engineer who is also president of the Chugiak community council, told KTUU.

"In my opinion, things are deficient out there," he said. "We don't have shear walls. We don't have some of the same lateral stuff that houses in Anchorage have. They're not designed properly in a lot of cases."

Residential building construction within the boundaries of what used to be the City of Anchorage requires plan review and inspection approval by a municipal inspector. Residential construction outside the limits of the Anchorage Building Safety Service Area — created in the 1970s when the Anchorage, Eagle River, Glen Alps, and other communities merged to form the Municipality of Anchorage — does not.

The municipal building safety code still applies. But because builders outside the designated building safety service area have the freedom to work with private inspectors, compliance is mostly a function of goodwill and work ethic. Without regulatory oversight, homeowners are left to trust that the experts they hire are competent and capable.

Which, as it turns out, is the way a lot of people like it.

Alaskans have a long history of industriousness, and a "less is more" approach to government. Without the red tape of government inspections, homeowners have more freedom to build at their own pace and minimize costs.

"Builders tell me it saves about ten thousand dollars on their costs to not have to go through all the inspections and plan reviews," Fred Dyson, an Anchorage Assemblyman and former state lawmaker who represents Eagle River, told KTUU.

Still, he wants worried homeowners — and lenders — to have an avenue to more assurance, if - and only if - they want it.

"One of the things I am working on right now is for the residents out there and the lending institutions to be able to use the city inspectors if they choose to as an alternative to using the private inspectors," Dyson said.

Horazdovsky would like to see a more rigorous approach.

"At the community council we are going to take it up and discuss possibly bringing MOA building safety out to Chugiak -Eagle River," he said.

The prospect of entire neighborhoods vulnerable to earthquakes because builders either didn't know the standards or intentionally ignored them is a significant public safety matter.

Was this one documented lapse in standards outside the building safety service area a chance encounter with a one-time problem, or a glimpse at something bigger?

Figuring out whether the home's sub-standard construction is an isolated incident, or a more significant problem hiding beneath the finishings of Anchorage's more affordable suburban homes may be a herculean task.

For now, the Municipality of Anchorage is starting with what it knows. On Dec. 18, 11 days after the inspection, in an unusual move, it revoked the site's land use permit issued to Troy Davis Homes, a licensed residential home builder.

The key here is "land use permit."

It — not a building permit — is the tool through which the municipality exerted its authority. Outside the service area, building officials cannot require plan reviews and inspection, through which building code compliance is verified. But, the Development Services Department can revoke a land use permit when the permit holder fails to comply with any applicable state or local laws.

Among the worrisome circumstances documented in the revocation letter is that a builder's representative told a long-time city inspector that "homes in Eagle River do not have to be constructed to this standard" (the standard as homes constructed in Anchorage).

For Noffsinger, such a high-stakes misunderstanding underscores the value in paying a little more to have inspectors disconnected from the builder (i.e., not paid by the builder) involved in the process.

"The better the quality of the construction, the more resilient the community is going to be economically, the easier the recovery is going to be after an earthquake such as the one we had," Noffsinger said. "At the end of the day that is a very good investment. It's cheap earthquake insurance is what it is."

Troy Davis Homes did not return calls asking for someone to clarify the company's permit status on the affected home.