Planning an ICF addition. House built into side of hill with front basement wall exposed. The basement will actually be a garage that connects to the existing basement. See attachment.

The city inspector wants to treat the garage as unconditioned space. As such he wants full 4' frost wall on all four sides of the garage. My architect had planned to step the footings as they back into the hillside. I see the inspectors point and agree that frost protection of those walls needs to be considered. I'm wondering if there is a more elegant way to handle it. Dirt side of the walls are protected once they get far enough below grade so it would just be a matter of protecting the garage side, right? Would adding foam below the poured floor work? Any suggestions?