You might be misinterpreting the law. Not sure for that case, but it's pretty standard (in this part of the world) that you can't use city or state name in commercial purposes (as a part of the name of the business or a product) without entity permission.

edit: also pages/domains that could be seen as representing the city can get notices about name usage. Domains, iirc, can be claimed for this reason by city.

It's kinda common sense, using city name, for some people, might be seen as representing the city, so any posts made by the page might damage the city public image etc.

edit 2: added note about part of the world

edit 3: moving this from reply

> I live in neighboring country, when you're starting a business you can't have city or state name in business name without permission. Also using domains that have city or state name included might get you in some trouble.

> Probably more usual in this part of the world.

Adding: since both our countries still have a lot of laws from communist era, there's all kind of crazy ideas pushed through laws.