Drop-down for populating a list of cities
View Model

Looks fine to me, although I'd recommend that if all your DTO classes are to be appended with 'DTO' you instead put them inside a namespace named 'DTO' and leave the 'DTO' characters off the class names entirely.

Controller

Use var when the Right Hand Side (RHS) is obvious.

Also, I don't like the indentation in your LINQ statement. It makes it difficult to discern between LINQ and constructor.

There is no point in calling ToList so much. AddRange is going to enumerate the whole collection anyway, so you don't actually need any ToList calls at all.

var Loc = new Models.LocationDTO();
var locCtx = new EF.LocationEntities();

public Action Result Index() {
    using(locCtx) { 
        var locResults = (from q in locCtx.usp_GetAllCities()
                             Select new Models.CityDTO 
                             {
                                 CityId = q.Id, 
                                 CityName = q.Name
                             }); 
        loc.Cities = locResults;
    }

    var citiesList = new List&lt;Models.CityDTO&gt;();
    var city = new Models.CityDTO()
    {
        CityId = "-1", 
        CityName = "Select City" 
    };
    citiesList.Add(city);
    citiesList.AddRange(Loc.Cities);

    ViewBag.CitiesDropDown = citiesList;
    return view(loc);
}


View

You make a call to Cities.SingleOrDefault(). SingleOrDefault() can return a null value if your City class' default operator returns null (which is the err default behaviour). If this happens, accessing CityId will fail.

//View

@{
    List&lt;TestApp.Models.CityDTO&gt; citiesList = ViewBag.CitiesDropDown;
    var cityItems = new SelectList(citiesList, "CityId", "CityName");
}
&lt;div&gt;
    Cities: @Html.DropDownListFor(x =&gt; x.Cities.SingleOrDefault().CityID, @cityItems)
&lt;/div&gt;