Can Angel's Grace set your life total to 1 when you have Negative Life?
For a weird case like this, it's best to consult the Oracle rulings.

In this case, we're in luck, since this situation is covered directly:


  If your life total goes below 1, being dealt damage will not increase it back up to 1.


So, according to the official rulings, damage from City of Brass can't "reduce" your life total to a higher number than its current value.

So, the remaining question is: does your life total stay -10 or become -11? My best guess (and it is a bit of a guess, to be honest) is that your life total becomes -11 because the "instead" just doesn't apply at all.