This mod increases the distance that the engine renders, creating bigger detail and less fading in the distance. It also works best with the mods that change GTA3 into HD. (HD cars, HD Effects and so on)

Instructions:

Before doing anything, make sure to backup your timecyc.dat file!

All you have to do is to copy the downloaded file into:
X:\Program Files\Steam\SteamApps\common\grand theft auto 3\data (STEAM) or
X:\Program Files\Rockstar Games\Grand Theft Auto 3\data (RETAIL)

Then done! Enjoy! 

(This is a really easy tweak but if people are really lazy or don't want to mess with the game's files then you can use this.)