Earlier quoted context omitted.
This is wrong. The simulation is not serverside. If you disconnect from the servers you can play your city all you want. The only serverside aspect is saves and social (including region play), which would be relatively easier to recreate.
Why did they have to disable accelerated time in the single player game? I'm not disputing what you are saying -- the notion that it had a server-side engine for single player games seemed silly -- but that aspect of the story struck me as very odd.
I made my statement based upon my experiences playing. For one, I played the game for 3 hours disconnected from the servers - I knew my progress wouldn't be saved but I just wanted to play. It seemed to work fine aside from region play and that my progress wasn't saved.
Another time I lost my internet connection for 15 minutes. I continued to play. When I got it back, it claimed it re-sync'd my game with the server. As a test I logged out and back in and it all looked the same.
Maybe there is some simulation on the server side. But it doesn't seem necessary based upon my experiences playing the game.