the case you are describing is of course eligible. Quoting from the Open Call Instructions:
If you want to experiment in a new city, you should provide evidence in your application that your experiment is relevant in the context of the city and has the potential to make a positive impact on local issues. You could find this information in the municipality’s strategic plans or through their long-term initiatives, and explore how your idea might support these.
Then, it would be desirable that the interest from the city in the experiment is clear/explicit.
Luis - Organicity Team