In this case, the city designations are important because each year the city divides a pot of money that goes to supplemental infrastructure improvements in each neighborhood.

Because it's supplemental money, it is a fixed amount for each neighborhood. If a neighborhood's boundaries increase, then money available for improvements in that neighborhood is stretched thinner. If a neighborhood's boundaries shrink, then more money is available for improvements per block.

This is why boundaries matter, and why they are codified.