I believe flag etiquette was not breached here. If more then 1 flag is flown flown on a single pole the American flag must be the highest one. If there are a series of flagpoles together in a planned display, the pole which flies the colors of our country must be higher then all the others in the group.
It seems in this case the flag pole flying the fag flag was across the street and not part of any multiple flag display.
The rainbow flag was flying on city hall’s flag pole. That says everything.