Keywords in URL's (Not Domains since Google's EMD Update) are used to give signals to the relevance of the page to that of what people are searching for.
Google used many methods to establish the relevancy of the page, such as:
- SEO Friendly URLS
- Meta Description
- Title Description
- On page headers
- Alt Tags
- Text Content
- Page Titles
- Off Page SEO (Links, Mentions, Social Media)
What is believed is Google has a cap with on Page Signals, so if you have too many signals on page SEO it can work in reverse effect, for example too many signals in text content, headers etc etc. So a URL is a signal, nothing more... it either helps or it doesn't since Google can establish the page relevancy without it.
You should treat URLS as increasing your click though rates, it gives trust-ability as well as indication to what people are clicking on the ending page.
So if people are searching for tips and hints on cooking a pie a URL with
/101-tips-and-hints-on-how-to-cook-the-perfect-pie/ will generally have a better click though rate when backlinking than
/pie/ and again it can give Google one of many signals that your page is about what you say it... but it doesn't mean you can't rank the page without friendly urls. But personally I treat SEO friendly URLS as increasing click though, nothing more.
So to answer your question... If the page has enough signals as in content, pictures, description, header, title then ya you wouldn't need keywords in the URL /contact-us/ would be enough because Google can establish that their site is in Chicago though using citations, and off page SEO..
/contact-us-chicago/ the use of Chicago on the end wouldn't increase click rate, nor does it provide any additional useful information to the user, so I personally wouldn't use this format.
If the customer's business is in Chicago for example they should be able to rank for residential home without the Chicago in the URL or even the Header for that matter because Google now uses local ranking though I would recommend the use of it in the Title as I believe meta, and title are the most important factors, after all this is what appears in the search results. This would only work if they are on Google Maps, Google places, and other local directories. But what you want to research is citations, and tell your customer SEO has changed in recent years, especially in the last 2 years.
I'm looking for authoritative sources that support either position,
not blog articles from SEO optimization companies trying to promote
Most authoritative SEO sites will inform you that Keywords in URL are a must, some however will say its a signal. It's important to note that most SEO articles are theorizing since Google doesn't release the exact SEO page factors.