Athens, Georgia. College town, home of what may be the biggest college in the state, the University of Georgia (Bulldogs, Herschel Walker, bla bla bla), and apparently lots of bars and lots of bands that play in them.
Bands from Athens that have had hit songs, or at least made records:
R.E.M. (of course)
The B-52's ("Love Shack" and another minor hit or two)
The Brains (wrote and recorded the song "Money Changes Everything" which was covered and made a hit by Cyndi Lauper)
There's surely a few more I can't think of or haven't heard about or didn't know they were from Athens. When I went to bars around Atlanta many years ago, a significant portion of the bands were from Athens, and also many Atlanta-area bands got gigs in Athens because it was a "happening music scene."
Yeah, Nashville is a no-brainer and "not just country anymore", and there's Austin and Seattle, and there's likely a few more college towns around the US that might work as well as Athens.