Nonseparated occupancies in existing buildings

I'm working on an existing building with a new A3 occupancy group with an occupant load of 106. It's on the 2nd floor of a 3-story building, so a separated occupancy would be difficult when looking at the horizontal separations. But the building complies as a non-separated occupancy based on A3, type III-A, sprinklered, with yards.

I've heard back from our plan checker, and their opinion is that we need to bring the entire building up to 2007 CBC (based on the 2006 IBC) requirements. Additionally, they say we need to verify the structural calcs since they say we are changing to occupancy category III (per IBC chapter 16).

My stance is that chapter 508.3.2 is not meant to change the occupancy or construction of the building- it's only a tool to provide an alternative to separated occupancies if certain criteria are met.

Does anyone have any information to clarify this issue?

thanks,

Greg
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