Você é desta cidade... you can't change the place where you were born, so use SER. Are you in this city? = it may not be permanently, just at that moment, so use ESTAR: "você está nesta/nessa cidade?"
for the 3rd singular person it is better to use the definite article to make it clearer and to sound more natural.
What is the difference between "desta" and "nesta"? Is it correct to say "Você é nesta cidade?" Also how do we say "You are from this city"?