Proctor, the main setting for Thin Air is a depressed town with an ineffective, corrupt police department and a large hispanic population which is viewed with hostility and disdain by the city authorities. It's no wonder that Parker decided to make up a fictional city, or he could have been facing libel charges.
Original Bullets and Beer contributor Arthur Martin noted: "I won't swear to it but Proctor seems to be Lawrence, Mass, - a large mill town off 93 in Andover. I haven't been there since the early 70's, and it was dying then." Bob Ames agreed with this assessment.
Presumably Proctor crime lord Freddie Santiago is fictional, but Lawrence's troubles are an all too real analogue to those of Proctor. A former mill town which struggled with revitalization, the city drew large number of immigrants from the Dominican Republic and Puerto Rico; there was a major riot in 1984 between working class whites and Hispanic youth. In the early 1990s the city suffered a wave of arson, with over 200 buildings burned between 1991-2.
Thin Air was published in 1995. Lawrence's arson and economic woes would certainly have been in the Massachusetts news. It's no surprise that Parker likely used this city as an inspiration for the crime-plagued setting he wanted for the novel.