The Alexandria City Council, ending what had become a recurring political nightmare, last night reluctantly killed a proposal to buy an Old Town parking lot for more than double the amount the city sold it for in 1985, then build a parking garage on it.

After a nearly two-hour executive session and a whirlwind meeting in which businesspeople and residents clashed, the council split 3 to 3 in a rare tie vote. The lack of a majority in favor killed the plan, under which the city would have purchased the property at Queen and Lee streets for $4.9 million.

City officials, who had hoped to buy the land for less than $4 million, had planned to build a parking garage at the site, which is in the heart of the congested waterfront area.

The officials proposed to pay for the land by creating a special tax district in Old Town, a proposal opposed by nearby residents. Several Old Town merchants favored the idea, noting that they are in desperate need of parking.

Last night's action ends a decade-long dispute that became an embarrassing saga. During those 10 years, the city struggled to buy the site, sold it for $1.9 million, then fought to buy it back. The matter went to court twice.

"The decision to sell the property in 1985 was a fateful one," said council member T. Michael Jackson (D). "To go back now and to try to correct that error for an additional $3 million, how responsible would that be?"

Voting against the measure were Jackson, Mayor Patricia S. Ticer (D) and Redella S. "Del" Pepper (D). Scott C. Humphrey, who recently was appointed to the council, did not vote because he had been employed by the owners of the property.

Voting to buy the property were William C. Cleveland (R), Kerry J. Donley (D) and Lionel R. Hope (D).

Even those who voted in favor of the proposal suggested that they were tired of dealing with the issue. "We've probably broken all records for revisiting this issue," Donley said.

The city paid almost $1 million more for the property than it had planned when it bought the parcel from the federal government in the early 1980s. Federal officials first agreed to sell the property for $925,000, but later raised the price to $1.5 million. The city then lost a court battle, which added another $400,000 to the cost.

In 1985, the city sold the property to a partnership led by developer Samuel T. Ellsworth for $1.9 million. In 1989, the council voted 6 to 1 to obtain the property again, and began condemnation proceedings.

But when a circuit court panel set the property's value at $4.9 million, the plan began to unravel. Residents said the plan was too expensive and would increase traffic.

At one point, the issue nearly derailed the political career of James P. Moran Jr., who gave up his council seat in 1984 after pleading no contest to a misdemeanor conflict of interest charge involving the land.

Moran, who had dealt with a man who had tried unsuccessfully to buy the parcel, overcame the incident and was elected mayor of Alexandria, and last year was elected to Congress. Nonetheless, Moran has called the incident the low point of his life.

Last night, Ticer said the economic situation was a key factor in her voting against the plan. "It's very difficult for me in this time of duress to support this proposal," she said.

But Cleveland, citing a need to keep Old Town robust, called the evening "a sad day for the business community."

Bryan Watson, president of the Old Town Business Association, suggested that those who voted against the plan sided with residents because it is an election year.

Still, Jackson said, "I just hope we have finally laid this issue to rest."