call it rules interpretation, more to that cities typically have people and cars, and drone flying should not occur above people. I did read and you are correct that you can fly 400' above a structure if you are within 400' of it, though I think this pertains to rural areas (water towers, antennas, etc), not a high rise building in the middle of a populated city. Just because people fly over a city, doesn't mean they should or that is allowed, FAA fact sheet says you can't operate a drone over a person not involved in the operation, which would be every person who happened to be walking on the city sidewalk below where the drone is flying. Maybe someone can post the rule that says city flying is allowed. If city flying is allowed, would appear to be limited because buildings would hinder line of sight flying. Regardless, operator in this example (if city flying is allowed) didn't maintain distance above the structure or line of site flying, common sense would work wonders!
FAA Fact Sheet
Fact Sheet – Small Unmanned Aircraft Regulations (Part 107)