Hi. Joy asked me to take a look at this as it's an unusual ranking situation.
While I agree that it is unusual for an organic filter to suppress rankings in just one location, I think that the egregious backlink profile of this site cannot be ignored.
If this is related to backlinks (which I think is quite likely), it's likely not a location issue, but rather, the anchor text of the unnatural links is holding the site back. And...the majority of the anchors use some form of the words "plumbing" and "austin".
I know what you're thinking...Penguin is supposed to just ignore unnatural links, not penalize for them. However, there are two things that I think we should consider here.
First, John Mueller recently said that unnatural links can impair a site's ability to rank somewhat. There are algorithms outside of Penguin that look at link quality. If they see that there are a large number of links that go against Google's guidelines, they can choose to put less trust in all of your links.
When asked whether unnatural links can hurt a site algorithmically, John said, "“That can definitely be the case. So it’s something where our algorithms when we look at it and they see, oh, there are a bunch of really bad links here. Then maybe they’ll be a bit more cautious with regards to the links in general for the website. So if you clean that up, then the algorithms look at it and say, oh, there’s– there’s kind of– it’s OK. It’s not bad.”
But wait...if this is the case, then why would only the Austin rankings be affected?
This is a long read, but a good one. Bill Slawski wrote about a Google patent that looks at link quality. That patent talks about how pages can be devalued for a particular query if there are a large number of links that are never clicked upon. I know it sounds crazy...it's worth taking the time to read it. Also, it's a patent so we don't know whether Google is using it, but if they are, it is built for cases like this.
The only thing that I can't fully explain is why this is only happening for searches from Austin. I think it's conceivably possible that if the patent mentioned above is being used in this case, that the system can detect that there was an attempt to manipulate rankings for Austin searches and therefore, it is suppressing the ability to rank there.
I haven't looked into the website at all...just the backlinks, but this is one of the more manipulative backlink profiles I've seen in a while. We had a similar case about a year ago where we audited the links and disavowed about 70% of a site's link profile. The links were quite similar to yours in the sense that they were low quality links anchored with a keyword plus the city name in which they wanted to rank. Within two months of filing the disavow, we started to see a nice uplift and it has continued to grow (see image).
The first thing I would do is check for the presence of a manual action. Do this in Search Console. You'll see Manual Actions in the left sidebar. If there's no manual action, I'd go straight to disavowing. Be extremely aggressive as the only cases where I have seen improvements after disavowing are ones where we dramatically cut out as much of the unnatural linking as possible. Even if there is something else going on such as a technical issue, these backlinks can't be ignored. While most sites do not need to disavow these days, this one, in my opinion does!
mhc-disavow-links-case.jpg