It's okay to answer that question honestly, a la "It's not likely that I would be able to help Bay Area conrunning." One of last year's applicants didn't even live in the USA, and one of the winners did not live in one of the nine Bay Area counties. I expect the scholarship committee would use locality as a tie-breaker; that is, give two applications that were equally good, they'd pick the Bay Area resident over the other.

But, like winning the lottery, if you don't apply, I can guarantee that you won't win.