It counts city-states for sure, but that counting can be glitchy. E.g. I think 'Kil X barbarians' is glitchy, doesn't count them correctly. Maybe same with these city-states... This boost is triggered when you found any city on the coast, not necessarily the first. So, you can have 2 cities inland and 3rd on the coast - the boost triggers. I checked it when working on my custom boosts. That's why I have created 'Found the Capital on the coast' which doeas exactly what it says - your first city must be on the coast.