Earlier quoted context omitted.
I'm not sure. Cities are supposed to approve or deny applications based on whether they comply with zoning, codes, parking, water availability etc. They can't deny based on who or what the business is alone. A city near me is dealing with a lawsuit for exactly that. It probably varies from state to state, I don't know.
Cities can largely do what they want. They can deny applications for whatever reason they want. Citizen concerns are very important here (they need to keep voters happy to keep their jobs). But their main mandate is to protect the public good. If a project isn’t in the interest of their community, they ca deny it. Whether or not it’s legal is another question. And NIMBY and… and… there are lots of potential concerns.…
Cities are bound by laws, and not complying opens them up to lawsuits which the taxpayers pay for. Sure, maybe that's in the best interest of the community in some cases. However, I think it usually happens because people have feelings and biases rather than as a calculated move.