While they may have "in house counsel" there is still a cost to those folks, and it IS part of the equation. I have been active in city government for over 2 decades and am well aware that cities do very often pay out on these sort of matters - some easier than others. Yes, they will make the claimant jump through all the hoops they can in the hope they might go away, but in the end many cities will pay out because it is still cheaper. Whether Monterey Park will do so, or whether they will fight it or not has yet to be seen. The OP has little to lose but time and a filing fee by filing in Small Claims Court. However, if he spends a few hundred dollars on an arborist to conduct an evaluation of the tree, he also risks losing THAT amount as well. Heck, he may not be able to recover the cost of the arborist in his claim! Hence my suggestion to file and pursue it even without the report from a tree specialist.
Settlements are most often an economic decision, not a matter of whether you can win or lose. Even in-house counsel costs you money, and cities do take that time factor into consideration. I can cite numerous cases where cities would have prevailed at trial but chose, instead, to settle out of court - sometimes for 6 figures - simply to avoid the expenses (and in serious matters, the bad PR) of a trial. Plus, many cities have budgets to cover such lawsuits as they expect to pay out on a few. One risk Management consultant cited statistics that showed that cities prevailed in more than 90% of those claims that went to trial in a suit, but I believe it was about 5% of claims that even went as far as a trial.