You've just answered your own question. In America, we believe it is illegitimate for any city or state government to not be a democracy. And democracy in practice means rule by a web of committees and bureaucracies. (Electing a strongman to cut through all of this is considered anti-democratic.)

But building an innovative product, whether that be an iphone or a new kind of city, requires directly responsible individuals ( https://medium.com/@mmamet/directly-responsible-individuals-... ). It cannot be design by committee. It requires having a singular will with the power to overrule the squabbling factions that just want to protect their own interests.

If you want innovation in the way cities are built and managed, you need cities to be able to have a Steve Jobs/Bill Gates-like CEO with powers far beyond that of any mayor, beyond the powers of any city government. But our current ideology of democracy does not allow for that.