A) Gotham City, not New York City.
B) Listen to the movie. It explains it for you, in depth: "Home, where I learned the truth about despair, as will you. There's a reason why this prison is the worst hell on earth... Hope. Every man who has ventured here over the centuries has looked up to the light and imagined climbing to freedom. So easy... So simple... And like shipwrecked men turning to sea water from uncontrollable thirst, many have died trying. I learned here that there can be no true despair without hope. So, as I terrorize Gotham, I will feed its people hope to poison their souls. I will let them believe they can survive so that you can watch them clamoring over each other to "stay in the sun." You can watch me torture an entire city and when you have truly understood the depth of your failure, we will fulfill Ra's al Ghul's destiny... We will destroy Gotham and then, when it is done and Gotham is ashes, then you have my permission to die"
It's to show Bruce his way of saving Gotham ultimately failed, that Ras Al Ghul's original plan was the way to go and he died needlessly.