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I am pretty new to the game, and while I have understood most of the key concepts, I am not quite sure how to use districts properly to manage my city. I find the whole concept of setting and managing districts quite confusing and overwhelming.

  • Is there any benefit to using many small districts for residential or should you just combine all residential zones into one district?
  • Should you combine different zone types (residential, commerce, industry) into a common district or is there a benefit of keeping different zones in different districts?
  • When would it make sense to use district policies like energy saving only for some districts but not for all?

If you could shed some light on how to use districts properly, I would be very grateful.

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Districts can be used for a couple of different purposes. Probably the most important trait you can set is the "no heavy traffic" policy. This can be extremely useful if, eg, you create a residential district which would be technically faster to use to go between your industrial and commercial sectors, but you want to have your trucks use the longer freeway that is better equipped to handle traffic and won't complain about the noise. You can also use this to create "no truck left turn" intersections by creating a small district on the left side that doesn't allow heavy traffic.

Other than that, there are more ways to use district specialization. JMR mentioned that you can use the lower electricity or water reduction policies in specialized industry districts (electric can be a net positive in office and high commercial areas as well if I recall). Generally, you'll probably just want to use Parks and Rec and recycling as general city policies, but if you really are pinching pennies you can restrict those to certain districts as well. People will require better land value in high tax areas and won't care as much in low tax areas, I probably don't need to explain why that's useful to set by district.

Another important (if callous) thing you'll need to do later on, once you have a well-educated population, is to create low tax, high density residential areas with no access to education past elementary school so you keep a supply of poorly educated citizens to man your industrial areas. In those areas using the education boost policy is obviously not wanted.

Should you combine different zone types (residential, commerce, industry) into a common district or is there a benefit of keeping different zones in different districts?

This is situational - in general, it probably won't make much of a difference if you combine different zoning types into the same district since most policies are separated by zoning type anyway (taxes, business investment/High Tech Housing), but if you want to optimize the reduced usage policies you should keep them separate (that said, once you get past 20000 people or so money becomes a non-issue).

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Districts by and large exist to give different areas of your city a distinct flavor. The only time I can think of that it would be necessary to district is if you want to do specialized industry.

I'll give an example from my own play to demonstrate. The map I'm playing on features an island in the middle of a sizable lake. I wanted to make the island into the "hoity-toity rich people place", so I used the "High-tech Housing" and "High-rise ban" policies on the district I drew over the island to enforce that. This left me with an area that looked and felt like a high wealth suburb, just as I had wanted.

So, taking your specific question about the energy consumption policy. There's a few situations I can think of where districting would be useful. First, forestry industry consumes more power than standard industry. You can mitigate this by using the power saving policy on your forestry district. Second, implementing that policy has a per-building cost, so doing so city-wide may be prohibitively expensive, but doing so in a few districts may be perfectly affordable.

For your first two questions, the policies themselves are granular enough that I don't see any need to separate different zoning types into different districts. Heavy industry tends to get its own districts in my city, but only because I keep it separate physically from everyone else due to the pollution. The other relevant policies, such as tax adjustments, are specific to certain zones anyways and so it wouldn't be necessary to give those zones distinct districts.

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districts can be used to force laws only in certain areas such as in a downtown area you could put a heavy traffic ban but allow it in other places. the second benefit is industry, you can tell the game to put certain industries in certain areas, for example: putting a farmland district on an area with rich soil

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