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The Rat Hills was the name given to a stretch of coastline a short distance to the south of Waterdeep, often used as a dump by the city.
When Waterdeep was still young, it was a simple, barren pebble beach that was a favorite spot for ships to land for repairs or take on cargoes like lumber, since even a mile out to sea the water wasn't any deeper than five feet. Once the city had grown large enough to suffer from raiders, however, the citizens began to worry that such an easy port was not only a free alternative to using the city's harbor, but also an easy place from which to attack. A shanty town sprang up that was soon under the control of the Shadow Thieves. The lords responded swiftly though, ordering the City Guard to clear "the Beach" of its inhabitants, kill any who resisted and maintain a strong patrol to ensure the area remained clear.
Under escort, the citizenry began bringing their garbage here rather than burning it directly outside the city walls, though this task was now handled by the Dungsweeper's Guild. The piles of garbage earned the place its later name — "Rat Hills" — and covered an area almost 4 miles (6.4 kilometers) in length by 1 mile (1.6 kilometers) in width. The accumulated waste poisoned the shallow waters and effectively prevented any hostile landing.
The Rat Hills Conflagration of the Year of the Shield, 1367 DR, reduced the size of the piles to under 2 miles (3.2 kilometers) in length and a quarter of a mile (0.4 kilometers) in width. The area was soon growing again by about half an acre per year. But apart from the daily Dungsweepers convoy and the guard patrols along the trade road, everyone left the area alone, owing to the poisonous waters, the infestation of rats, and the various monsters for which the Hills were a haven.
The smell was indescribable; it foiled all efforts to track by scent and if it wasn't so dangerous, then that trait would likely have been exploited by those on the lam. As it was though, despite the Conflagration dispersing many of the area's monstrous inhabitants, there were still a great many creatures, living and undead, that resided in the refuse heaps and shallow waters. The most dangerous creature in the hills was probably Hlaavin the doppelganger.
Lizardmen from the lizard marsh and kobolds from the Maiden's Tomb Tor were at times spotted in the hills in ever-increasing numbers. While the lizardmen were known to be considering building a fortified lair in the hills, the kobolds' motivations for living in the Hills were unknown.
Every night, a contingent of twenty or more men-at-arms, equipped with lances, heavy crossbows, and personal weapons, supported by at least two clerics of Torm and a hired wizard (who often brought along an apprentice) could be found watching over the Hills to make sure the hungry monsters didn't make an incursion into the surrounding area.
As well as the poisonous water and the monsters, the Rat Hills were infested with disease. The animals and monsters carried it, the insects that constantly swarmed the Hills carried it, and the water (both rainwater pools and the seawater) and of course the dry garbage "land" were infected. Although not the only disease one could catch, the most common one was known as darkrot.