When you use the tool, you will get a slightly different menu option (bottom left) and it will allow you to re-arrange your city. You can temporarily place all your roads and buildings (except Town Hall) in a storage, and then you can, one by one, take them out of storage and reset them on your city grid (within the expansion grids you already own). When you click save or discard - so that your newly designed city will now exist instead of your previous city, or you can click on the reconstruction tool and start all over again.