This is a criminal matter, not a civil matter. It's just like if a guy punches me on the street, but I decide it was cool and edgy and added to the gritty vibe of the neighborhood. The prosecutor can still bring charges.
Surely not. Better question: is "vandalism" without criminal trespass or property damage actually a crime? If it's on private property, and the property owner enjoys the painting, it seems like it'd be quite a stretch for the state to establish that the artist damaged the property by creating it.
Private property is one of the foundations of market economy, and I can't think of any necessity of art that calls for suspension of it.
On the same vein, the Mayor can't sue on behalf of private owners. If the owners like it, then its OK.