City university graduate in the navy (5)
I believe the answer is:
urban
'city' is the definition.
(thesaurus)
'university graduate in the navy' is the wordplay.
'university' becomes 'u'.
'graduate' becomes 'ba' (**).
'in the' is an insertion indicator.
'navy' becomes 'rn' (abbreviation for Royal Navy).
'ba' going inside 'rn' is 'rban'.
'u'+'rban'='URBAN'
(Other definitions for urban that I've seen before include "Relating to a city/town" , "Municipal" , "Of towns or cities" , "Town (adj.)" , "Situated in city or town" .)