Having one large layout with the entire city is much more difficult to do, but it is possible. So it's up to you what kind of experience you want the player to have.
Some things to consider if you want to do it the hard way and have the whole map on one giant layout:
1) This is more feasible if you have small / low resolution graphics (eg pixel art). You can get away with loading in more things if they are small and don't take up much memory.
2) You may be able to make use of render cells on some layers with a lot of static objects to cut down on the performance overhead.
3) You may be able to set up some sort of fancy optimisation systems such as saving the entire city grid in an array and repositioning objects to give the illusion of a vast city (eg. in reality there is only like 50 buildings but you keep shuffling them around behind the scenes whenever the player gets close to things so it looks like a huge location).
4) You can enable / disable groups of events when certain things are on screen or not. For example, you might have a group of events that makes a bus drive around the city: you could just disable those events if the bus is not on screen. This sort of thing helps make sure the player's computer isn't tied up thinking about things it doesn't need to be.
5) C3 has good memory management features that mean you can (eg.) unload an object's sprites from memory (which normally only happens when you exit a layout). This might be handy for certain things (eg. if the player collects the last powerup, you could unload the artwork for that item from memory since there is no need for it any more).
If all this sounds too technical, though - the much easier way to do it is just to build the city across multiple layouts with loading zones :)