Billfan, you are doing all the right things, especially bringing in your Councilman, and we really sympathize with you.
City building inspectors vary in their reasonableness and flexibility, and it looks like you really had bad luck by getting a mean one, plus a mean supervisor.
I’ve had work done once where a permit seemed superflous and costly, so I told the (licensed) contractor to “Do it to code, but don’t pull a permit”. On one occasion the unpermitted work was discovered, but because the work was to code I just paid extra to have the permit pulled after the fact.
A lot of permits are really silly, and the Development Office is actually a profit center for city government. They charge a huge hourly rate to review plans, and inflate the hours involved as well. I believe you even need to pull a permit and have an inspection just to replace a water heater in your home.