The purpose of allowing "AM on FM" translators is to provide improved coverage within the AM station's service area. It gives that opportunity to daytimers or stations whose nighttime coverage of their community of license is inadequate. But here's the catch: it's to be used to fill in the gaps only and it can't be used to extend the AM station's coverage area. [Quoting from the Report and Order that authorizes such operations: AM broadcast stations will be allowed to use currently authorized FM translator stations (i.e., those now licensed or authorized in construction permits that have not expired) to rebroadcast their AM signals, provided that no portion of the 60 dBu contour of any such FM translator station extends beyond the smaller of: (a) a 25-mile radius from the AM transmitter site; or (b) the 2 mV/m daytime contour of the AM station.]
So don't expect too much if you're looking for coverage of the large city; the maximum power for a translator is 250 watts.
Currently all of these AM on FM translators are operating under STA's, but it will officially become part of the rules on October 1st, and all that will be necessary is for the owner of the translator to simply notify the FCC which station it is rebroadcasting.
It should be noted that since the FCC started allowing such operations, almost without exception these have been existing local FM translators, so you have a choice. The best scenario would be to buy or lease one that's nearby. Otherwise you could find one that's not in the immediate area and apply to change the COL, but that could prove to be quite costly and probably would take a long time, with no guaranty of success.