By Luke Hammill and Jeff Manning

A Portland building inspector is under investigation after she admitted selling engineering software to contractors on buildings she helped approve, including the controversial Yard project at the Burnside Bridgehead.

The Oregon Building Codes Division hopes to revoke the license of Marcia Karr, an inspector with Portland's Bureau of Development Services. The state has also proposed fining her $6,000. The city, too, has opened an internal investigation. Karr told The Oregonian/OregonLive her bosses at the bureau knew what she was doing.

The inquiry raises more questions about whether the Yard meets Oregon's energy code and has prompted new statewide conflict-of-interest rules that many in the building industry have vehemently opposed.

In at least two cases, the state claims, Karr recommended for approval projects in which the building architect used her "Engineer in a Pocket" software to make certain energy calculations. She also used her city email address to send out promotional materials for Engineer in a Pocket, according to emails collected by the state. Karr has 20 days to request a hearing on the matter.

Karr, who works three days a week at the bureau as a mechanical and energy codes plan reviewer, told The Oregonian/OregonLive that she's done nothing wrong. She said she developed the Engineer in a Pocket software tool, which helps contractors calculate long-term savings from installing various energy-efficient systems, on nights and weekends.

"I invested thousands of dollars and years of my time developing this tool," Karr said. "I sold it for $300, pocket change. It was a win-win. But now, all of a sudden, I'm unethical?"

Portland Commissioner Dan Saltzman, who oversees the development bureau, declined comment on the state investigation through his chief of staff, citing the ongoing internal probe.

Karr said she sold the software to five customers. The best known of them helped build the Yard, a 21-story mixed-use apartment tower at the east side of the Burnside Bridge.

Karr was part of an effort to add additional windows to the building while still maintaining compliance with state energy code after revelations emerged that the Yard differed significantly from schematics approved by the city's design commission.

The bureau acknowledged in January that between the design panel's approval of the project in 2013 and the issuance of a building permit nearly two years later, Portland-based Skylab Architecture made changes to the plan that should have triggered either revisions to the design or a reset of the land-use review process. The city didn't catch the changes - Skylab never brought them to the development bureau's attention - and approved the building permit anyway.

The flub resulted in a significantly darker building that had about 30 percent fewer clear window panels than the originally approved version, according to city emails. (Skylab contended the total reduction in window area was closer to 10 percent.) Skylab said it had reduced the number of windows to meet Oregon's energy code.

Once the issue became public, negotiations between Skylab and the city ensued about how to bring the building into design compliance, who would pay and whether, with the addition of new windows, it would still comply with the state energy code.

During those talks, according to testimony collected during the state investigation, bureau plan review manager Terry Whitehill suggested that city staff meet with Skylab employees in person to solve the problem. Karr attended the meeting on city time, along with bureau land-use planner Staci Monroe and Thomas Ng, another bureau staffer.

"There was a thought that we needed to partner with Skylab to find a solution as opposed to put all the onus on them," Monroe told a state investigator. "It was the city's mistake in the first place." Karr testified that there were "a lot of politics" involved and that the bureau "bent over backward."

As Monroe remembers, Karr presented the Skylab architects with two choices to demonstrate the building complied with the energy code: A "whole building analysis" that could cost as much as $30,000 or the $500 (and much faster) Engineer in a Pocket.

Brent Grubb and Jeff Kovel, of Skylab, chose the cheaper, quicker alternative.

Karr did not disclose her affiliation as a co-owner of the product, the state found. Karr said she offered other software products, too, but other attendees interviewed by the state disputed that claim, saying she mentioned only Engineer in a Pocket.

Monroe told a state investigator she'd never heard of Engineer in a Pocket before that meeting and found out about Karr's affiliation only after being told weeks later by Skylab officials, who had searched it on the Internet and found Karr's name. Monroe then alerted her and Karr's boss, Whitehill, who said he would be "speaking to" Karr, Monroe told the state.

Kovel said it seemed "odd" to be offered Engineer in a Pocket, which he had never heard of, only to find out later that it was Karr's product. He and his colleagues brought their concerns to the city, he said in a phone interview.

"The answer was, they were comfortable with it," Kovel said.

Karr told The Oregonian/OregonLive that Whitehill had been aware of her affiliation with Engineer in a Pocket but said she could not remember who originally had the idea to propose it to Skylab's subcontractor, American Heating.

The bureau declined comment on whether Whitehill told Karr to offer Engineer in a Pocket to Skylab, saying through a spokesman that the question was part of the internal probe.

After the meeting with Skylab, Karr taught employees of American Heating how to use the software, according to the state probe. Once the subcontractor completed the Engineer in a Pocket analysis, Karr, in her capacity as a bureau inspector, recommended approval of the findings, the state found, and the bureau did accept them. The software demonstrated that the energy saved through Yard's sophisticated mechanical system would offset the energy lost through additional windows.

Karr told state investigators that Whitehill knew she was meeting with American Heating.

Eventually, the city and Skylab reached a tentative agreement to add 67 windows to the tower, with builder Key Development saying the city would pay for most of the cost through fee refunds. The city said the amount to be refunded is still under review.

Karr said in a phone interview that Engineer in a Pocket was never intended for architects to demonstrate compliance with state energy code but rather to help contractors convince their customers to use more energy-efficient equipment, saving money and lessening pollution in the long run. But she stands by the Yard findings, claiming they are more conservative than the more exhaustive and expensive whole-building analysis.

Andrea Simmons, enforcement manager with the state Building Codes Division, said she doesn't know whether Engineer in a Pocket is rigorous enough to meet Oregon's building and energy standards.

"We haven't done the analysis," she said. The city is also looking into that question.

Some Portland-area contractors are big fans of Karr. "She's one of the few people who really work hard to help you get a permit, as opposed to finding a reason to not grant you a permit," said Clint Latimer, of Oregon Heating and Air Conditioning. "She had this software product. She's virtually giving it away. She didn't try to use any leverage to sell this software product. That's complete and utter crap."

The investigation has prompted the Building Codes Division to impose new conflict-of-interest standards over the furious objections of inspectors across the state - including the city Bureau of Development Services, which testified through a letter from Whitehill against the new rules while the investigation was still ongoing.

The new rules say Oregon inspectors who work for municipalities "may not get paid to perform or manage work regulated by the state building code for a company engaged in construction or property development." Included in that category are inspectors involved in "selling products or services that design, test, or audit buildings...regulated by the state building code."

The rules went into effect July 1. In his opposition letter to the state, Whitehill wrote that the new provisions "may limit the city's ability to hire and retain qualified people" and noted Portland already has its own code of ethics and ability to investigate potential conflicts of interest.

"Most local jurisdictions cannot compete with the private sector in terms of salaries," Whitehill wrote. "Allowing employees to supplement their incomes with private sector work outside of the jurisdiction where they work helps all local jurisdictions hire and retain skilled workers."

Key Development President Jeff Pickhardt did not return a phone call seeking comment.

-- Luke Hammill and Jeff Manning

lhammill@oregonian.com

503-294-4029

@lucashammill

jmanning@oregonian.com

503-294-7606

@JeffmanningOre