Dictionary of Real Estate Terms: Municipality Utility District (MUD)
Municipality Utility District (MUD)
a utility that serves a limited geographic area, formed as a municipality rather than a private corporation to take advantage of lower interest rates available to municipal bonds. Allows development in an area that might otherwise not have utility services.
Example: A MUD was to be formed to provide water and sewer service to 500 homes on the edge of the suburban fringe of the city. It raised money by selling municipal bonds at tax-exempt rates. Revenue from utility payments was used to service the debt.
