The possibility of an unlitigated and friendly settlement over the construction of a new home in the Austin Terrace Historic District dissolved in discord today when City Council voted 4-2 to uphold the neighbors' appeal.

That leaves the owners, Jorge and Lisa Valenzuela, with only one recourse: a lawsuit against the city.

Earlier this year, city inspectors mistakenly issued a building permit to allow a massive, two-story, 4,000 square foot house to go up in a 1920s era neighborhood without the approval of the Historic Landmark Commission, as required.

When the city’s mistake was discovered, the city halted construction of the partially built house, which the neighbors contended was not in keeping with the rest of the historic district.

Admitting the city’s error, City Council last month agreed on a plan to send the issue to the Historic Landmark Commission, hire an architect agreed on by all parties to redesign the house at city expense to conform with the city’s standards for historic preservation and to seek the agreement of the neighbors.

If the Valenzuelas, the neighbors, the landmark commission and, ultimately, the City Council had agreed on the designs, the city was prepared to pay a substantial part of the cost to reconstruct the house.

But, it didn’t come together.

The landmark commission rejected four proposed designs for the house, because of the scale of the redesigned house and because the designs left two-car garage or carport in front of the house instead of moving it to the rear.

“There never was a consensus between the neighbors and the applicant, and the landmark commission denied the certificate of appropriateness for any of the designs the applicant brought forward,” said West-Central city Rep. Susie Byrd, whose district includes Austin Terrace.

Byrd recommended that the council uphold the neighbors’ appeal and prohibit the Valenzuelas from building completing their $300,000 home.

The city hired architect Bill Boyd, who came up with four alternate designs that he thought would bring the house more in line with Austin Terrace.

The Valenzuelas' lawyer, Frank Ainsa, said two of the designs were acceptable to the family but not to the landmark commission, which turned them down as inappropriate on Friday.

The neighbors opposed the redesigns for the Valenzuela's house and the current design as well.

“They wanted the Valenzuelas to tear down the house and erect a single-story house of about 2,000 square feet with the option of a basement if they wanted more space,” Ainsa said.

Supporting Byrd's recommendation siding with the landmark commission and neighbors and against the Valenzuelas were West Side Rep. Ann Lilly, East Central Rep. Emma Acosta and Eastridge/Mid-Valley Steve Ortega.

Northeast Rep. Melina Castro and East Side Rep. Rachel Quintana voted against the neighbors' appeal. East Valley Rep. Eddie Holguin was absent from the meeting and South-West Rep. Beto O'Rourke left before the vote.