I personally thought New York would be a good city, but Baltimore sounds nice too. 

As for other over-arching villain ideas, what about the Order of the Blackened Denarius? Nicodemus or any of his cohorts of Fallen could make good villains, though I wouldn't go for any of the ones we see in the books. Also, I'm not sure if they'd be all for the Three-Eye business, aside from the fact that they grow stronger off of Human suffering and catastrophe. Maybe they could be involved with the Black Council? I don't know.