The expression cityC,Co is usually read as the relation "C is a city of Co", which is fine for computational purposes, but this reading obscures the notion that the object C is being typed as a city; more precisely, it is being typed as a city of Co.
in order to make this reading more apparent, we will write the grammar as: we allow the categories to be indexed by terms (a move which is a kind of "currying" of a relation into a type for its first argument).