InoyOleh
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For now, I think that the mechanic of setting the base color of a city when building a fort is the most adequate, in my opinion. Because it won't diminish the importance of the upgrades themselves (there are no selective recolorings; the base color changes for the entire city). And at the same time, it will allow you to play with any of the colors as a base. Instead of 1 type of city, we will actually get 3 of its subtypes (the ability to choose one of them).
Although the idea of immediately getting all 3 upgrades, and getting a boost from 3 housing improvements, also has merit.