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In a Q&A, Rockstar said that the Ghost Town was meant to be a part of Liberty City. The Ghost Town is the set for the opening cutscene of Grand Theft Auto III, where Claude is helping Catalina rob a bank, before being betrayed and shot. It is highly likely that Rockstar designed the Ghost Town simply for the introduction cutscene of the game, and decided to not place it in Liberty City itself, so they simply placed it off to the side of the map, where it would be difficult for the player to get to. The Ghost Town is floating in mid-air, underneath the large hills of Upstate Liberty. The streets and buildings are non-solid, and the town cannot be accessed without glitches, mods or hacks. This is the place, where the opening cutscene takes place. The Ghost Town is basically a small city block with the Liberty City Bank, and some stores, and apartments.
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