A MUD (Municipal Utility District) is a special governmental entity created by the State of Texas whose main functions are to provide water and wastewater services and to maintain drainage facilities within its boundaries. A MUD may levy and collect taxes, issue bonds, charge for services, condemn property, enforce restrictive covenants and make regulations to accomplish its purposes. The MUD tax collections are typically paid back to the developer for reimbursement of their costs as part of the development process. MUD districts may also reimburse costs for MUD attorneys and financial advisors. MUDs engage in the supply of water, conservation, irrigation, drainage, fire fighting, solid waste (garbage)collection and disposal (including recycling activities), wastewater (sewage) treatment, and recreational facilities.
A MUD can require its customers to use its solid waste services as a condition for receiving other MUD services. A MUD may provide solid waste and recycling services through a private company. While they can develop, maintain, or acquire parks or recreational facilities, MUDs are prohibited from issuing bonds to pay for these facilities. They can, however, set and charge user fees.