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Dungeon Master's Guide (page 138) presents a method for generating number of characters for each class when generating community. You need to roll dices and add community modifier to generate maximum level of given class in given community and from there

if the highest-level character indicated is 2nd level or higher, assume the community has twice that number of characters of half that level. If those characters are higher than 1st level, assume that for each such character, the community has two of half that level. Continue until the number of 1st-level characters is generated.

Above quote is for PC classes, but for NPC classes the method is similar, only 1st level characters' classes are assigned in different way.

For commoner NPC class and metropolis, there is 74,23% chance that highest level will be over 20, up to 28.

The first part of the question is:

If maximum level of NPC is generated as 21 or higher, should it be truncated to 20?

If the level should not be truncated, it is natural that level 28 commoner will generate 2 commoners at 14 level each, they will generate 4 level 7 commoners and so on. However, if the original commoner's level should be truncated to 20, should I use 20 as the base to generate lower level commoners (generating 2 commoners level 10 and so on) or still 28?

The second part of the question:

If level should be truncated as above, should I use original or truncated value to generate lower level NPC of the same class?

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The Dungeon Master's Guide on Other NPCs in the Community on Highest-Level NPC in the Community for Each Class says, "The maximum level for any class is 20th" (138). Thus, according to the rules, if a randomly generated NPC is level 21 or higher, its level should be adjusted downward to 20.

However, you can without fear let epic NPCs be epic NPCs

This DM has had no problems with, when randomly determining NPCs in a community, leaving NPCs' levels uncapped. Having a handful of epic NPCs in a metropolis just isn't that big of a deal. The Dungeon Master's Guide includes rules for epic levels (206–10), so there are even rules right there for creating such townsfolk if you want. (Be sure to give them important positions worthy of their levels. Also, deck them with magic items sufficient to escape whatever might be after them—nobody reaches epic without making enemies!)

In other words, I've found that if an NPC's level is randomly determined to be level 21 or higher, that level can be kept and that citizen's level can be used to populate further the town as normal. According to the DMG, only 1% of the towns in a campaign should be metropolises, so this DM doesn't mind making a metropolis an exciting and interesting place that's and filled with all manner of NPCs, including, potentially, epic commoners and experts.

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    \$\begingroup\$ That sounds like what's going on in the hidden leaf village in naruto \$\endgroup\$ – Jesse Cohoon Aug 2 '16 at 0:44
  • \$\begingroup\$ Why should the PC's be the biggest names in town? They just got here. Lord Mayor Phrincehap the Just has run this town for 15 years, after he avenged the murder of the previous lord, and defeated the blah blah blah blah... \$\endgroup\$ – tzxAzrael Aug 4 '16 at 2:34

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