City officials on Thursday denied applications for building permits at Sixth Street and Wakarusa Drive, setting up the next round in the battle over a proposed Wal-Mart in northwest Lawrence.

The decision corrects the city’s mistake in May, when officials withheld permits for a Wal-Mart and an unnamed restaurant on the site — but never made a proper denial. Last week, Douglas County District Judge Michael Malone ordered the city to make a formal decision in the case.

City Manager Mike Wildgen would not discuss that order Thursday, saying repeatedly that the city’s decisions in the case had been made “on the advice of counsel.”

“We’re carrying out … the City Commission direction,” Wildgen said.

Bill Newsome of 6Wak Land Investments LLC, the property owner, promised an immediate appeal to the city’s Board of Zoning Appeals.

“The city has no valid, no legal reason not to issue the building permit,” Newsome said. “This denial is going to be challenged.”

Wal-Mart spokesman Keith Morris said his company, which filed a separate-but-unresolved lawsuit in the case, probably would follow suit.

“I would be surprised if we didn’t,” Morris said.

A new battle could be waiting at the zoning board. Member Jason Fizell criticized 6Wak during the board’s June meeting, saying the landowners should have brought their case to the board before filing the lawsuit.

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During the spring election Fizell was campaign manager for City Commissioner Boog Highberger, who was on a slate of candidates critical of Wal-Mart’s proposal.

Roger Walter, 6Wak’s attorney, said Thursday that no decision had been made whether to seek Fizell’s recusal from the matter because of a conflict of interest.

But, Walter said, “I would think he should recuse himself. He’s indicated that he’s taken a position on the issue.”

Fizell indicated he would not do so.

“I simply stated, as is my right, that jurisdiction in this matter properly belonged to the BZA, and this was in fact the judge’s decision,” he said. “As one of seven members of the board, I stand ready to hear the appeal of this question now properly brought before us.”

6Wak and Wal-Mart filed their separate suits this spring after officials in May refused to grant the permits and the Lawrence City Commission ordered a building moratorium for the site.

City officials said the restaurant was part of the same plan under which a 132,000-square-foot Wal-Mart also would be built. Wal-Mart, they said, is a department store and thus prohibited from the site by zoning rules. 6Wak said Wal-Mart should be classified as a “variety store,” which would be allowed.

Malone’s order applied only to the restaurant building permit application, but city officials decided to address the Wal-Mart permit at the same time.

Also Thursday, Wildgen acknowledged that officials had pulled a City Commission-initiated rezoning of the site off the August agenda of the Lawrence-Douglas County Planning Commission, despite the end of a restraining order against the action.

“It was out of caution and on advice of counsel,” he said. “We wanted to be careful.”

Although a city board, the Board of Zoning Appeals might not rubber-stamp the city’s decision. Only two of the seven members — Fizell and Mike Goans — have voted consistently with so-called “neighborhood” interests such as those opposing the proposed Wal-Mart.

Any ruling by the zoning board could be appealed to district court.

Newsome declined to speculate on his chances before the board.

“I think the facts are on our side,” he said. “That’s what I’ve said all along.”

Thursday’s decision came a week too late for 6Wak and Wal-Mart to be heard at the zoning board’s September meeting. The issue will most likely be heard at its following meeting, set for Oct. 2 in City Hall.-7126.