Yeah, city law can easily override deed laws. But further, eminent domain allows the city to strip away deed restrictions through a "one weird trick". The city can eminent domain the land from themselves removing the restriction and then sell it privately.

The same way the city can eminent domain your home and put a road through it. The HOA can't stop the city from putting in a new road.

Aren't deed restrictions usually done at the state level? If so, the city can't just magic them away. State law is going to trump city law unless the city's restrictions are tighter.

Can they do so retroactively? If they didn't declare imminent domain beforehand, I'd expect this is contract violation.

But we're all guessing at Lawyer Facts(tm).