From a purely technical perspective, it should be possible to do this with an ODB-II device with GPS and BTLE. You could send everyone with a car the option to buy a device and register the device to associate it with their license plate.

Put a couple of plate readers around vulnerable areas with BTLE and make sure that the plate that's being read has an associated device. Any time one doesn't traffic enforcement comes in. You could even connect it to retracting bollards to make it physically impossible to enter vulnerable areas without a car that has a registered remote controlled governor.

Even from a security perspective it's not super hard to design, assuming the city is the trusted authority.

From an economic perspective, most of the hardware could be paid for by car owners since they would be buying a device that acts as a permit to enter the city. A device could additionally require a subscription, which would pay for the yearly costs of the server infrastructure and maintenance.

Once you had such a system in place, it would be pretty easy to even charge people tolls for entering sensitive areas. Hell, you could probably replace most of parking enforcement by just charging people a constant rate for being in the city. You could even use GPS to charge different rates in different parking zones.