My husband has served on Planning Commissions in two states. Churches and schools normally are allowed as a "use by right" in all zoned areas because they are considered as beneficial for the populace. I dunno about California courts, but I think this church has a very strong case. The greedy City of Cypress would be thrown out on its ear if it were either in Texas or Wisconsin.
They would have to find some other reason for denying this, such the Church structure posing a danger to the Congregation or other residents (blocking vision at an intersection, for instance). Or construction of the Church would seriously deplete the water supply or cause flooding for the rest of the community. Of course that argument would block construction of the retail center too.
The Church should sue, or threaten to sue. It's amazing how City Attorneys will change their tune when they are faced with defending a lawsuit. They usually duck and run.