The Alexandria City Council's decision to deny a special use permit to a commercial firm that wanted to conduct a business in a recently renovated Old Town house has forced the firm to consider selling the $760,000 property, the company's lawyer said yesterday.

Eden Hannon & Co., which early yesterday was refused the permit it had expected for its recently purchased Anchorage House on Queen Street will have to consider what to do with the four-story house, said Lee Fifer, the attorney. "We don't know right now what to do next."

The City Council, which voted 6 to 0 to deny the permit, had voted unanimously last December to grant such a permit and to approve a change in zoning regulations that facilitated the sale of the house at 603 Queen St. to the financial consulting firm.

The issue returned to the council late Tuesday after officials discovered the proponents of the change had failed to notify nearby residents of their request for the permit.

Vice Mayor Patricia S. Ticer, who has been criticized for voting on the original zoning permit because the real estate firm that employes her, Jacob & Roberts, handled the sale of the house, abstained from the vote early yesterday.

She denied having violated a Virginia conflict-of-interest law by that vote, but said because of the "public perception" she would not vote on the permit request.

City Attorney Cyril D. Calley said he had advised her last fall that her voting on Anchorage House questions would not violate the law. He did not elaborate.

Alexandria prosecutor John E. Kloch said earlier that his reading of the law is that a city official is in violation if he grants a public favor to a firm in which he has more than 3 percent interest or if he receives more than $10,000 a year from the firm. Ticer said that she receives more than $10,000 in commissions from the real estate firm, but that she gained nothing from the Anchorage House sale.

Terms of the initial zoning change required that a public hearing be held, and also that residents living within 300 feet of Anchorage House be notified by mail. The letters were never sent.

"An associate in this firm failed to send the information," Fifer said yesterday. "He has submitted his resignation but we will decide what to do later." Fifer, a partner at Boothe, Prichard & Dudley, one of Northern Virginia's largest law firms, would not name the associate.

The zoning change occurred Dec. 15 when the council passed an amendment at the urging of Eden Hannon that broadened the definition of professionals who could operate in essentially residential areas.

Previously, only licensed professionals -- usually doctors and lawyers -- were allowed to conduct a business from a home.

The same day the council granted the company a special use permit.

Some members of the council said they were not aware of a planned addition to Anchorage House when they cast their initial votes. They also said they were acting under the impression that the company would have 15 rather than 40 employes.

The project was financed with tax-free industrial revenue bonds, a point that also troubled some council members.

Council member Robert L. Calhoun also said that he believed the bonds, which the council must approve, should be used more judiciously.

"This is just a mess," council member Donald C. Casey said at the end of a 4 1/2-hour discussion on the house.

The council also voted 7 to 0 to approve City Manager Vola Lawson's recommendation to begin an administrative review of the Public Safety Department in June.

The review, Lawson said, will evaluate the department, which is headed by Charles T. Strobel.

Mayor Charles E. Beatley and some council members have criticized Strobel's management. He won a ringing endorsement for his control of the department recently by a special grand jury.