Legal Question in Real Estate Law in California

Our home abuts a busy city street, in the San Diego area. My grandfather built the home in 1946 and five generations of family have lived here. For over fifty years we have had and maintained a fence located in a right-of-way granted to the municipality, Over the years the street has been widened and sidewalks installed. Municipal code grants existing encroachments perpetuity, but I was told by the city that if we removed the existing fence to replace it with new, we would have to build the new fence on the right-of-way line, which passes through a portion of our home (an area built by permit in the 1960s). To sidestep that battle we kept the existing posts and are putting new fencing on the existing fence structure. Now the city is threatening Armageddon. Do prescriptive rights apply to cases such as this, in a public right-of-way?

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