The myth is based on a series of UFO sightings in Shoreline Park in Gulf Breeze, Florida, in 1987. People reported seeing red orbs, disk shaped objects, and strange glows in the sky. However, it was later found out to be a hoax.
Such reports also exist in GTA Vice City, mainly due to hoaxes made by myth hunters in order to convince the community of their existence. Even if the flying saucer at the InterGlobal Studios is somehow activated by mods, it's highly unlikely that it could replicate the unusual shape of the Gulf Breeze UFO.
Theories are also put forward about the UFO monitoring the city, but all of this is fallacious.