htauth breaking admin since upgrade to CI3

[eluser]starchild[/eluser]
Since upgrading to CI3, our admin folder (plain php, not CI) throws a 500 error if we have htauth switched on.

If I remove it, leaving only "RewriteEngine off" in the hatccess file, admin works again.

How can we have htpasswds still?

(and yes, admin is an excluded folder path in the site root htaccess)