Even though it's the home of House Hlaalu none of the councilors actually live in Balmora's city limits. The Thieves Guild, The Mages Guild and The Fighter's Guild all have hubs in Balmora and are all to eager to contract work to any adventurer who's passing through and could stand to make a few hundred Septims.
With Moonmoth Legion Fort nearby, the Empire has some influence within Balmora. For years, House Hlaalu and the Empire have grown closer and could be considered allies. The mining town of Caldera is a prime example; at the extreme protest of the other two houses, the Empire built Caldera with House Hlaalu's full support.
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