It's not really arbitrary though, is it? It's decided by duly-elected representatives who answer to the citizens of the municipality. A government "of the people", etc.
I feel like what you're arguing against is precisely why we have local governments in the first place.
Congress could pass a law tomorrow, or California could pass a ballot measure with a 100% Yes vote, saying (for instance) that some random company now belongs to the government, or to Gavin Newsom personally, or to me, but the courts would still be obligated to strike it down since that grossly violates the Seventh Amendment. Ideas like this are commonly referred to as being checks against "mob rule" - the system recognizes that 'what the people want' isn't necessarily supreme when it runs up against other people's recognized rights.