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Dancing Rabbit Ecovillage – Community Housing Law

Dancing Rabbit Ecovillage

Disclaimer

The Sustainable Economies Law Center cannot warrant that the legal model of Dancing Rabbit Ecovillage is perfect in every respect. In fact, there may be room for improvement in its legal structure and documents. However, this is true of EVERY community. We nevertheless feel that it’s important to share information about unique communities, so that others may begin to replicate and improve upon the models. If you plan to use the information and sample documents in this case study as a model for your community, we strongly urge you to seek the advice of a lawyer, and to revise all documents to ensure that they comply with your state and local laws and ordinances, and that they meet your community’s needs.

Overview

Dancing Rabbit Ecovillage is a community of about 60 people located on 280 acres of land in Northeastern Missouri. Residents live mostly in single family homes and are continuously expanding the number of buildings on the land. Dancing Rabbit hopes to expand to between 500 and 1000 people eventually, and serve as a model ecovillage for the nation. Residents share many of the costs of living with co-op structures, such as their food/kitchen co-ops, water co-op, and vehicle co-op. Many of the residents have started their own small businesses, and the community has a robust local economy. The vision of Dancing Rabbit is to create a village where residents are able to live sustainably, so that resources are not consumed faster than their natural replenishment rates and so the village’s internal systems will be able to continue without degradation.

While this profile discusses the legal arrangements relating to land it also delves into the vibrant community and local economy. The economy and community are deeply intertwined and supported by the land arrangement.

Dancing Rabbit is trying to create a replicable model of a way of life that is environmentally and socially sustainable, and to do this, they have laid out a set of covenants:

Ecological Covenants of the Dancing Rabbit Land Trust

  1. Dancing Rabbit members will not use personal motorized vehicles, or store them on Dancing Rabbit property.
  2. At Dancing Rabbit, fossil fuels will not be applied to the following uses: powering vehicles, space-heating and -cooling, refrigeration, and heating domestic water.
  3. All gardening, landscaping, horticulture, silviculture and agriculture conducted on Dancing Rabbit property must conform to the standards as set by OCIA for organic procedures and processing. In addition, no petrochemical biocides may be used or stored on Dancing Rabbit property for household or other purposes.
  4. All electricity produced at Dancing Rabbit shall be from sustainable sources. Any electricity imported from off-site shall be balanced by Dancing Rabbit exporting enough on site, sustainably generated electricity, to offset the imported electricity.
  5. Lumber used for construction at Dancing Rabbit shall be either reused/reclaimed, regionally harvested, or certified as sustainably harvested.
  6. Waste disposal systems at Dancing Rabbit shall reclaim organic and recyclable materials.

These covenants form the basic social contract that residents agree to when they move to the ecovillage. The details of how to live sustainably are left up to the community to experiment with and document.

Buying the Land

The founders started out by researching locations across the country that would be suitable to their vision. They wanted a location that was close to other intentional communities, with cheap land and no building codes or zoning restrictions. They eventually settled on a location in Scotland County, Missouri, near the Sandhill Farm community, which offered to let them stay while scouting for nearby property to purchase. They established a 501(c)(2) nonprofit land trust to hold title to the land, the Dancing Rabbit Land Trust Inc. In October 1997, Dancing Rabbit Land Trust purchased 280 acres of land for $190,000.

A significant portion of the money was borrowed from members, family, and friends so they would not require a traditional bank loan. There were three main lenders: one member, one relative of a member, and a community loan fund. Each of these three lenders received a fractional mortgage to secure the loan. For example, one member invested $90,000 in the land and received a 9/19 fractional mortgage entitling them to 9/19 of the sale price if the land was foreclosed upon. This way, the risk of loss was distributed equally among the lenders and no one lender was prioritized over the others.

There are several benefits to structuring the purchase of the land in this way. If the ecovillage failed to be sustainable, members with loans would get their money back from the sale of the land. If they had donated the money instead of lending it, the laws governing nonprofits would have prevented them from recovering that donation. Thus the risk was minimized for founders.

The founders borrowed more than the cost of the land to leave themselves a cushion to make payments. This was crucial to their survival because their expenses were greater than their income for the first five years, and they would have had to default on loans without the cushion. After five years they had enough income from land leases to pay all the costs and be fiscally sustainable. This arrangement also allowed the cost of the land and the startup costs to be amortized over time, meaning the costs were spread out over time so that later members would pay a share as well. This made it easier and less risky for the founders to start and maintain the ecovillage in the beginning.

Legal Structures of the Community

Dancing Rabbit has two nonprofit entities: a 501(c)(2) nonprofit land-holding entity called the Dancing Rabbit Land Trust Inc., and a 501(c)(3) nonprofit organizational entity called Dancing Rabbit Inc. The Land Trust holds title to the land and leases the land to residents. The 501(c)(3) focuses on education and outreach, spreading the word about sustainability and the village’s experiments and accomplishments.

501(c)(3)

Dancing Rabbit Inc. seeks to develop a replicable model of sustainable living, to document this model, and to use this model to foment broader social change. In the community, this entity manages the outreach and educational activities of the ecovillage, bringing the goals of the community to life. Dancing Rabbit Inc. pursues its educational goals through a number of projects, including their Ecovillage Experience Program, Video Project, Speakers Tour and Ambassador Program, Ecological Audit, and the Green Community Center. Dancing Rabbit’s scientific research goals focus on developing and promulgating its model of sustainable living, which covers much of the development decision-making.

Governance Structure

The 501(c)(3) has a membership composed of permanent residents, and all permanent residents are required to be members. The membership formerly held regular Business Meetings, run by consensus to ensure that all those affected by a decision will have a say in the decision, to discuss topics needing group input or approval. In addition to topics related to the 501(c)(3), meetings also addressed topics related to the 501(c)(2), the Cattail Co-op, and the Vehicle Co-op, because all or most residents are members of those organizations (discussed in more detail below).

The Village Council, an elected group of seven villagers, now makes many of the decisions that formerly called for full-group meetings. Each co-op or organization decides whether or not to use the Village Council to make decisions on its behalf.

The Village has many empowered committees, with varying levels of decision-making, policy development, and policy implementation powers. These committees are typically made up of 2-4 members and meet regularly. Some examples of committees include: Process Team, Land Use Planning and Policy, Care Team, Membership and Residency Committee, and Visitor Team. The committee structures form an intricate, interconnected web of activity. Depending on the topic, committees are empowered to make decisions on behalf of the full group, and/or with the approval of the Village Council. The full group still meets as a whole for a few topics, including Board nominations and choosing the Village Council. Most members serve on one or two committees and donate 2% of their income to the 501(c)(3).

The Board of directors runs the nonprofit and delegates significant responsibility to the Eexecutive Director, one of several staff positions for Dancing Rabbit Inc. Other positions include a Development Director, Communications Coordinator, Webmaster, and administrative staff.

Consensus decision-making

Dancing Rabbit adopted consensus as their default decision-making process because it offers everyone a voice, improves the quality of decisions, ensures every member feels invested in the community, and builds a community culture that emphasizes deep listening, care for the commons, and meeting the needs of others. The Village Council, committees, and the Board all operate using consensus.

For a decision to be adopted, consensus requires that all members consent. Many members give consent even if they don’t fully agree with it, because consent is inherently different than full agreement. Using consensus requires that the group work hard to take everyone’s concerns into consideration and craft a decision that everyone can live with. Individuals can block a decision if their concerns are based on a value the group has endorsed and cannot block for other reasons. This, of course, requires that the group hold common values and to understand when they have the power to block. New members go through a consensus process training to build a strong base of understanding within the community. The details of the membership agreement are discussed below in the lease and sample documents sections.

Power Levels – Delegation by the Membership (usually via the Village Council)

Dancing Rabbit uses a power level structure to manage the delegation of decision-making authority and manage decision-making relationships. The membership is the body of ultimate authority (as delegated by the Board and group agreement), and is generally represented by the Village Council (VC). The VC (and other authority entities) delegate power levels to committees and staff. These are the power levels:

  • Power level 1 is the right to make a proposal to the membership. Every individual member has this power as well.
  • Power level 2 is the right to send a proposal to the membership/VC via email. If there are no unresolved objections in two weeks, the proposal becomes an actionable decision.
  • Power level 3 is the right to send a proposal to the membership via email and have it take effect immediately. If there are unresolved objections in two weeks it is automatically reversed, pending further discussion and resolution.
  • Power level 4 is the right to make decisions that take effect immediately.

These power levels are topic-dependent. For example, a hypothetical Fence Committee might have power level 4 over repairing existing fences, but only power level 2 over extending a fence, and power level 1 over building a completely new fence.

Generally, topics that have more impact on the community require more community input. Power levels can also be in relation to different groups. The normal relationship is between the empowered committee and the membership. But it can also be between staff and a committee, between staff and the VC, or between a committee and the VC.

Currently, Dancing Rabbit is operating with an elected 7 member Village Council and delegating many decision-making responsibilities to it. The membership gave the VC various duties and responsibilities, some of which it has delegated to other committees. Thus, if the Village Council had power level 4 over new fences, the Fence Committee could be given power level 2 to the VC (PL2VC) over new fences and report to them on that topic. This topic-specific governance model ensures that those who are affected by decisions have a voice in them. Plus, all committee meeting notes, decisions, proposals, and documents are open to the entire community, ensuring a high level of transparency.

Becoming a Member

Potential members apply for membership to the community. A committee reviews applications, interview applicants, and makes recommendations, generally at power level 2, to the membership via email. The membership admits new Residents who have limited rights in the community. After at least six months of Residency, residents can apply to become Members, at which point they have full membership rights. Residents have the right to live in the Ecovillage but not to lease land, and the right to attend meetings but not to block consensus. Once accepted as a Member they can lease land and block some decisions.

501(c)(2)

Dancing Rabbit Land Trust Inc. is the title-holding entity for Dancing Rabbit Inc. Its primary purpose is to hold title and lease land to residents, leaving the management and development of the land to the residents under the aegis of the 501(c)(3). 501(c)(2) organizations must be under the control of another non-profit, thus the board is the same as the 501(c)(3)’s board. In Dancing Rabbit’s case, the board has delegated land management duties and development decisions to the membership of the 501(c)(3) while still maintaining basic oversight. Sequestering the title to the land in a 501(c)(2) protects the land from any creditors and liabilities the 501(c)(3) may develop.

The 501(c)(2) leases land to residents in return for a monthly fee. The fee goes toward property tax and administrative costs. This is a “no buy-in” fee, meaning that no one has to pay a large sum upfront to lease land, which makes it an affordable option for most people. The 501(c)(2) owns the title to the land, but the residents own anything they build on the land. They are able to buy and sell these improvements amongst themselves and when the land lease is transferred. The details of the lease are discussed below in the lease section and sample documents section.

Dangers of Private Inurement and Private Benefit

When a 501(c)(2) organization has a board identical to its 501(c)(3) parent, as in Dancing Rabbit’s case, it likely must follow the same restrictions as its parent nonprofit. 501(c)(3) nonprofits are prevented from providing private benefits to people and private inurements to insiders. Private benefits are basically when the nonprofit benefits a private person or group excessively. The courts have defined private benefit as “nonincidental benefits conferred on disinterested persons that serve private interests” – American Campaign Academy v Commissioner, 92 TC 1053 (1989). Benefits to specific members of charitable groups that the nonprofit exists to serve, like low-income people, usually do not count as a private benefit. Private inurement is a subcategory of private benefit, meaning any type of conduct that results in an improper benefit to an insider (i.e., employee, board member, member, etc.). Nonprofits often run into problems with this when it comes to excessive employee compensation, but the benefit does not have to be monetary. A certain level of incidental benefit is allowed. The quality and quantity of benefit, as well as whether it is incidental to the exempt purposes of the organization are decided based on the situation and the exempt purposes the entity pursues.

The danger of private inurement arises whenever there is a contract between a member and the organization. In this case, low fee land leases present an obstacle for Dancing Rabbit, as the low fee might be seen as an improper inurement to those members. To confront this obstacle, Dancing Rabbit’s lease includes a promise by the leaseholder to further the mission of Dancing Rabbit with their use of the land, to abide by Dancing Rabbit’s Ecological Covenants, and to follow the community land development plans and land use plans dictated by the 501(c)(3). Thus, by providing low cost land leases, Dancing Rabbit secures allies and participants in its endeavor, as well as rental fees.

Dancing Rabbit’s mission is scientific and educational. The scientific aspect of creating a replicable ecovillage model requires people who are willing to abide by the mission and the community’s decisions about the land while they are living there. Part of the model is a low-fee and no-buy-in fee structure to ensure that low-income people would be able to join ecovillages built on the Dancing Rabbit model. Thus, the benefit of a low fee is incidental to the experimentation that Dancing Rabbit is conducting.

Additionally, the fee per acre is apportioned based on the costs associated with the land, such as property tax and mortgage payments.

Internal Cooperatives

To sum up so far, the 501(c)(3) organizes the scientific and educational work of the community and the 501(c)(2) manages the community’s legal rights to the land. Beyond the limited scope of these purposes, there is still much work to be done. Dancing Rabbit’s community has created numerous internal cooperatives to organize other important affairs and save money through sharing resources. Membership in these co-ops is generally not mandatory and depends on the individual needs of each resident. Residents are also free to create their own new co-ops. These co-ops take on a variety of forms, some requiring a specific kind of entity to be created.

Here is a list of some of the co-ops that exist at Dancing Rabbit:

  • Better Energy For Dancing Rabbit (BEDR) Power Co-op manages over 25 kilowatts of solar panels that produce power for the village. This internal grid is connected to the external grid, allowing the village to have power when the sun is not shining. The co-op has a net metering arrangement with the local power company, providing a revenue stream by selling power back to the grid. To stay aligned with their environmental covenants, the co-op has agreed to export twice as much power as it imports. There is a monthly fee of $8-10 per member and a $0.35 charge per kWh.
  • Kitchen/Food Co-ops: There are a number of kitchen/food co-ops operating in the village. Usually a group of people shares kitchen space, food costs, and labor (meal prep, cleaning, etc.) in order to provide meals for themselves, and their families and guests. Costs currently range from $7-9/day, depending on the co-op. Some co-ops have been open to any interested resident; others are generally closed (due to operating at capacity, and/or based on member preferences). There have been omnivorous, vegetarian, and vegan co-ops in existence during Dancing Rabbit’s history.
  • Dancing Rabbit Vehicle Co-op provides transportation for Dancing Rabbit residents, since their covenants prevent them from owning private vehicles. The co-op uses electric and biodiesel vehicles to minimize fossil fuel use. Most residents live and work within the village, so do not need motorized transportation. Walking and bicycling are sufficient for transportation within the village.
  • Cattail Co-op is the umbrella billing organization for a number of smaller co-ops, several of them mandatory. These include:
    • Village Commons Co-op – all residents are part of this co-op, which maintains paths and fences, pays village governance costs, recycling costs, and other community costs that would be difficult to split up by individuals.
    • Water Co-op: all residents are part of this utility co-op.
    • Humanure Co-op and Shower Co-op: these two co-ops cover common restroom facilities. Since some people have their own composting toilets and/or showers, not all residents are part of these co-ops.
    • Digital Coyote and Howling Coyote: these two co-ops provide internet and phone access for community members who do not have their own services.
    • CASA co-op: a co-op that manages the use of the La Casa de Cultura building.

ELMS – Local Currency

The Dancing Rabbit community has created a currency, called ELMs. With this currency, members can pay for many of their daily needs. This currency falls under the purview of the 501(c)(3). The ELM system is a democratically-organized system of exchange which is a version of a Local Exchange Trading System (LETS). ELMs are an electronic currency and although there is a capacity for printed scrip, this means of exchange is generally not used. The currency is managed and accounted for by a version of the open source software “Local Exchange.” Everyone has an electronic account where their balance and transactions are recorded. They can send ELMs to others and these transactions are recorded in real time. To improve transparency and accountability they can be instantly checked by the transactors. US dollars may be exchanged for ELMs, and vice versa. The exchange rate is one to one.

Everyone starts out with a zero account balance and no one can maintain a negative balance due to legal concerns over using debt as a currency (discussed below). Some organizations, though, are allowed by the community to carry a negative balance in their ELM account and the records of this are made public. This is, in effect, an interest free loan from the community. The 501(c)(2) uses this ability to smooth out cashflow problems that it used to have, namely that property taxes are due before a yearly grant from the USDA Conservation Reserve Program is received.

This negative balance is one way that ELMs can be created.   The other way is through conversions from US dollars. Around 40% of the current transactions are converting US dollars into ELMs and vice versa. This is the major way that people are able to create initial positive balances, and once those positive balances are created, ELMs are recycled constantly throughout the community.

The entire ELM system also must keep in balance. When ELMs are created through a US dollar exchange with the central exchange, the US dollars are held in an account. Note this is different from the case where two individuals swap a dollar for an ELM, no ELM is created in that instance. The entire volume of ELMs in the system must equal the total number of US dollars held in the account plus any negative balances held by organizations. At the time of writing, there were 92,000 ELMs in circulation and $65,000 in the bank account. There was $27,000 of negative balances held by organizations, thus all ELMs can be traced back to their creation: 92=65+27. If this ever gets out of balance then the system immediately shuts down as a safeguard against being hacked.

For residents, ELMs are relatively easy to use compared to US dollars and there are no fees for transactions like there are with credit cards and loans. Members only need to log into the internet to send money to the other party. This encourages people to shop locally and to utilize the skills of other people and organizations that accept ELMs. ELMs are taxed the same as dollars and must be reported to the IRS. Workers paid in ELMs must pay taxes on them as anyone paid in dollars.

The ELM system became so widely used and valued because the Dancing Rabbit Land Trust started accepting ELMs as payment for lease fees, which every member has to pay. This institutional buy-in gave ELMs value to everyone because everyone had a use for them. This lowered the risk to people and organizations who wanted to start accepting ELMs, because they knew they could use them to pay the lease fees if nothing else. And as the currency started to be accepted at more places, it started to flow around the community. This cycle built to the point where everyone’s daily needs can now be paid for with ELMs.

Additional source for this section: http://www.ecovillagenews.org/wiki/index.php/Ecovillage_Economics:_Dancing_Rabbit%E2%80%99s_ELM_System

Concerns over Debt as a Currency

Members of Dancing Rabbit received advice from a lawyer who was concerned about their use of debt as a currency, so they have stopped allowing individuals to take on debt balances. In researching this question, there were a number of names describing currency that may apply to this, including Bills of Credit, circulating private debt, private currency, private money, scrip, banknotes, monetary instruments and possibly prepaid access. Congress has likely passed laws to regulate how banks and other private parties operate in relation to these kinds of currency. Further research is needed in this area. Out of an abundance of caution, Dancing Rabbit has elected to not allow individuals to go into debt in ELMS until further research can be done to ensure that they are acting in accordance with the law.

The term Bills of Credit is used by the Constitution, and States and the Federal Government are prevented from issuing “bills of credit” by the Constitution. For states, this is Article 1 Section 10. For the Federal government, the court has read this restriction in because the ability to issue bills of credit was in the Articles of Confederation but not in the Constitution. A bill of credit is a debt instrument (like a loan) that is intended to circulate as a currency of equal value to the legal tender that the state promises to pay at a future date. An example of this is a bill of credit created by the Continental Congress that said “This Bill entitles the Bearer to receive THIRTY Spanish milled Dollars, or the value thereof in Gold or Silver, according to a Resolution passed by Congress at Philadelphia, Sept. 26 , 1778.” So the value of the bill itself is in a separate currency. (Source: http://mises.org/books/rozeff_us_constitution_and_money.pdf – a kind of skewed analysis by a Professor of Finance; Craig v. Missouri, 29 U.S. (4 Pet.) 410, 425 (1830))

In the 1830s, Missouri issued some Bills of Credit, which were challenged in Craig v Missouri and Byrne v. Missouri, 33 U.S. (8 Pet.) 40 (1834). In Craig, Chief Justice Marshall stated that “A bill of credit may therefore be considered a bill drawn and resting merely upon the credit of the drawer, as contradistinguished from a fund constituted or pledged for the payment of the bill.” This seems to mean that if there was a fund to fully back up the debt instrument, it would not be a bill of credit because it symbolizes ownership of something in existence instead of a promise of the issuer to pay in the future.

In the book “A Treatise on the Law of Negotiable Instruments, Volume 2” the author, John Warwick Daniel, states that the Constitution does not prohibit private parties from issuing bills of credit, only governments. This was tested in Briscoe v Bank of Kentucky where a bank incorporated by the state issued bills of credit. The Supreme Court said that this was okay because it issued the bills on the credit of the bank and not on the credit of the state.

Money Services Business Requirement

A related issue to creating a currency based partially on debt is whether ELMs qualify as a Money Services Business. Money Services Businesses must register with the Financial Crimes Enforcement Network and follow regulations requiring, among other things, record keeping. An alternative currency may be considered a Provider of Prepaid Access and/or a Money Transmitter. Further research is needed into this.

Sources: http://compliance.csiweb.com/newsletters/february-2012-newsletter-readmore.htm; http://www.fincen.gov/news_room/nr/html/20111102.html; 31 CFR 1010.100

Lease, Residency Agreement, and Cost of Living

Lease

As was shown in the section above on legal structures, Dancing Rabbit is a conglomeration of different legal structures. All of those structures come with agreements and commitments that the residents undertake. In this section we will look at the agreements relating to land. Additionally, we will look at the cost of living and how much all of the commitments cost for residents.

Who Can Lease

Leases are only allowed to be made to member residents who have passed their trial period and been accepted as full members. This restriction can get complicated when leasing land to businesses and other entities, so currently Dancing Rabbit allows leasing to entities with at least one member in them. More restrictions may be added in the future if this starts to give too much control of the use of the land to non-residents, but so far this problem has not arisen. One advantage of this setup is that a member’s family can invest in their entity and be a partner in it without causing problems with the lease. Some group houses have formed entities to lease their property with, while others have multiple members on the lease.

Lease Requirements

The lease is made between the 501(c)(2) Dancing Rabbit Land Trust and the lessor member or entity. The land lease requires that the lessor pay a monthly lease fee. The lease fee is set by Dancing Rabbit Land Trust at $.01/sq.ft./month for residential leases, with lower rates for garden and agricultural leases. These fees pay for the expenses of the land, such as land property taxes and mortgage payments. The lessor cannot assign any of their rights without the approval of the Land Trust. However, they can allow other people to reside on the land as long as those residents sign a Dancing Rabbit Residency Agreement. The lessor also assumes all liability and risk associated with the use and occupancy of the land and if the Land Trust does have to pay something, then the lessor will indemnify the Land Trust. These provisions are to protect the Land Trust from situations that could endanger it. The lessor will also protect the land from waste and use it in accordance with the land use plan and Dancing Rabbit’s covenants. This is to protect the land from use that is considered unsustainable.

With approval from the Land Trust, a lessor may build improvements on the land, which the lessor then owns. As such, the lessor must pay property taxes assessed on those improvements. The lessor may also sell those improvements to other people, usually accompanying a transfer of the lease. Selling improvements without an accompanying transfer of the lease would cause problems for the new owner since the lessor is not allowed to give them an easement. Indeed, lessors are not allowed to grant easements, sell mining rights, adopt land conservation, or build roads, and must maintain their use within the conditions decided by the community. The lessor also receives some rights that the Land Trust can decide later to restrict, such as the right to hunt and cut timber as well as surface water usage. This is to protect the land from being used in an unsustainable way or a way that is contrary to the land development plans of the community.

Termination

The Lessor may terminate the lease as long as they give 60 days notice and dispose of their personal property and improvements. The sale of improvements is overseen by a committee to ensure that the improvements are sold at fair market value and that the value of the land is not added to the value of the building, ensuring that the land is removed from the market system. The Land Trust may terminate the lease if it is violated, including failure to pay lease fees; if the land has been harmed; if the lessor has been absent for 6 months or more; or for failure to comply with a lease arbitration judgment. The lessor has considerably more control over when the lease is terminated to allow people both security in their residency and the ability to move if they want to.

Transfers of the Lease

Cosigners can be added and subtracted with the consent of all parties involved. If the last signer dies, then the lease will transfer to the spouse or domestic partner of the signer, the children of the signer, or the other residents of the signer’s household. The Land Trust will take into consideration the last wishes of the late signer and the relative capacities of the lease inheritors when deciding who to transfer the lease to. To vest this right to the lease, a person must send a written application to the Land Trust notifying them that they would like to continue the leasehold. This provision is to ensure that families and residents can stay in their residences while still maintaining the Land Trust’s interest in the land and how it is used.

For the full text of the lease, please refer to the examples in the documents section below.

Residency Agreement

In addition to the lease, a lessor must sign a residency agreement. All residents, whether they are on the lease or not, must sign a residency agreement. The residency agreement is meant to ensure that all residents, whether they lease property or are renting from someone leasing property, will abide by Dancing Rabbit’s covenants and community decisions. Land lessors cannot rent to people who have not signed the agreement. Many of the restrictions on use present in the lease are reiterated in the residency agreement. Please refer to the full text of the residency agreement in the documents section below.

Cost of living

In line with their covenants, most Dancing Rabbit members try to live simply and at low cost. Co-ops help mitigate the cost of many services, and lease fees depend on the size of the leased plot. For each square foot of residential and garden space, the lease fee is one penny per month. Thus, an average leasehold of 2,500 square feet will be $25 per month. The lease fee rate for agricultural land is one penny per month for every 100 square feet. Please see the chart below for a breakdown of the cost of living, which Dancing Rabbit provides on their website. Required costs and fees are marked with a *.

EXPENSE DOLLARS PER MONTH
*VCC Village Commons Co-op (can be partially paid with labor) $66.25
*DR Dues (only for DR members) $5.00 minimum
DRLT Lease Fees (For people renting tent platforms or for DR members who are leasing land. Cost given is based on 2,500 sq.ft leasehold; your lease size may vary) $25.00
The above three costs are kind of like neighborhood association fees. For this you get the benefits of living in community as well as use of roads, paths, a common house, and access to DRLT land for nature walks.
RENT AND UTILITIES DOLLARS PER MONTH
Rent (estimated, and assuming there is a place for rent) $150-450
Full Shower (indoor + outdoor) $11.31
Solar Shower only $4.63
*Water Co-op $5.23
Electricity (for a single person’s small home) $11 access fee, plus $0.37/kwh $20-40
HowDi Coyote (internet + phone) $14.07
Humanure Co-op $18.16
CASA Co-op $9.49
There is a lot variation in how folks choose to meet the above kinds of needs. You can belong to co-ops for phone, internet, showers and toilet services, or you can provide your own or go without. Electricity, if desired, can be provided via an off-grid system.
OTHER EXPENSES DOLLARS PER MONTH
DRVC Vehicle Co-op mileage (Vehicles costs are based on mileage driven. Vehicle rates are $.62 per mile ($0.80 per mile for the truck). Cost given is based on 25 miles a week; your mileage may vary) $50 average
Kitchen Co-ops (includes food, kitchen rent & utilities) $7-11/day
Common House Kitchen (if you choose to eat on your own instead of joining a food coop – does not include food) $63.72
Travel Varies.

So a lessor who wants to use all of these services could end up paying less than $700.

Documents

Sample Standard Lease

Membership Agreement

Sustainability Guidelines

Bylaws

501(c)(3) Tax Return – 2014

7.   Acknowledgments

This profile was written by SELC Legal Fellow Will Pasley with input from SELC Co-Director Janelle Orsi. Special thanks to Tony Sirna and Dancing Rabbit for sharing so much information about their community.

Dancing Rabbit Ecovillage

Disclaimer

The Sustainable Economies Law Center cannot warrant that the legal model of Dancing Rabbit Ecovillage is perfect in every respect. In fact, there may be room for improvement in its legal structure and documents. However, this is true of EVERY community. We nevertheless feel that it’s important to share information about unique communities, so that others may begin to replicate and improve upon the models. If you plan to use the information and sample documents in this case study as a model for your community, we strongly urge you to seek the advice of a lawyer, and to revise all documents to ensure that they comply with your state and local laws and ordinances, and that they meet your community’s needs.

Overview

Dancing Rabbit Ecovillage is a community of about 60 people located on 280 acres of land in Northeastern Missouri. Residents live mostly in single family homes and are continuously expanding the number of buildings on the land. Dancing Rabbit hopes to expand to between 500 and 1000 people eventually, and serve as a model ecovillage for the nation. Residents share many of the costs of living with co-op structures, such as their food/kitchen co-ops, water co-op, and vehicle co-op. Many of the residents have started their own small businesses, and the community has a robust local economy. The vision of Dancing Rabbit is to create a village where residents are able to live sustainably, so that resources are not consumed faster than their natural replenishment rates and so the village’s internal systems will be able to continue without degradation.

While this profile discusses the legal arrangements relating to land it also delves into the vibrant community and local economy. The economy and community are deeply intertwined and supported by the land arrangement.

Dancing Rabbit is trying to create a replicable model of a way of life that is environmentally and socially sustainable, and to do this, they have laid out a set of covenants:

Ecological Covenants of the Dancing Rabbit Land Trust

  1. Dancing Rabbit members will not use personal motorized vehicles, or store them on Dancing Rabbit property.
  2. At Dancing Rabbit, fossil fuels will not be applied to the following uses: powering vehicles, space-heating and -cooling, refrigeration, and heating domestic water.
  3. All gardening, landscaping, horticulture, silviculture and agriculture conducted on Dancing Rabbit property must conform to the standards as set by OCIA for organic procedures and processing. In addition, no petrochemical biocides may be used or stored on Dancing Rabbit property for household or other purposes.
  4. All electricity produced at Dancing Rabbit shall be from sustainable sources. Any electricity imported from off-site shall be balanced by Dancing Rabbit exporting enough on site, sustainably generated electricity, to offset the imported electricity.
  5. Lumber used for construction at Dancing Rabbit shall be either reused/reclaimed, regionally harvested, or certified as sustainably harvested.
  6. Waste disposal systems at Dancing Rabbit shall reclaim organic and recyclable materials.

These covenants form the basic social contract that residents agree to when they move to the ecovillage. The details of how to live sustainably are left up to the community to experiment with and document.

Buying the Land

The founders started out by researching locations across the country that would be suitable to their vision. They wanted a location that was close to other intentional communities, with cheap land and no building codes or zoning restrictions. They eventually settled on a location in Scotland County, Missouri, near the Sandhill Farm community, which offered to let them stay while scouting for nearby property to purchase. They established a 501(c)(2) nonprofit land trust to hold title to the land, the Dancing Rabbit Land Trust Inc. In October 1997, Dancing Rabbit Land Trust purchased 280 acres of land for $190,000.

A significant portion of the money was borrowed from members, family, and friends so they would not require a traditional bank loan. There were three main lenders: one member, one relative of a member, and a community loan fund. Each of these three lenders received a fractional mortgage to secure the loan. For example, one member invested $90,000 in the land and received a 9/19 fractional mortgage entitling them to 9/19 of the sale price if the land was foreclosed upon. This way, the risk of loss was distributed equally among the lenders and no one lender was prioritized over the others.

There are several benefits to structuring the purchase of the land in this way. If the ecovillage failed to be sustainable, members with loans would get their money back from the sale of the land. If they had donated the money instead of lending it, the laws governing nonprofits would have prevented them from recovering that donation. Thus the risk was minimized for founders.

The founders borrowed more than the cost of the land to leave themselves a cushion to make payments. This was crucial to their survival because their expenses were greater than their income for the first five years, and they would have had to default on loans without the cushion. After five years they had enough income from land leases to pay all the costs and be fiscally sustainable. This arrangement also allowed the cost of the land and the startup costs to be amortized over time, meaning the costs were spread out over time so that later members would pay a share as well. This made it easier and less risky for the founders to start and maintain the ecovillage in the beginning.

Legal Structures of the Community

Dancing Rabbit has two nonprofit entities: a 501(c)(2) nonprofit land-holding entity called the Dancing Rabbit Land Trust Inc., and a 501(c)(3) nonprofit organizational entity called Dancing Rabbit Inc. The Land Trust holds title to the land and leases the land to residents. The 501(c)(3) focuses on education and outreach, spreading the word about sustainability and the village’s experiments and accomplishments.

501(c)(3)

Dancing Rabbit Inc. seeks to develop a replicable model of sustainable living, to document this model, and to use this model to foment broader social change. In the community, this entity manages the outreach and educational activities of the ecovillage, bringing the goals of the community to life. Dancing Rabbit Inc. pursues its educational goals through a number of projects, including their Ecovillage Experience Program, Video Project, Speakers Tour and Ambassador Program, Ecological Audit, and the Green Community Center. Dancing Rabbit’s scientific research goals focus on developing and promulgating its model of sustainable living, which covers much of the development decision-making.

Governance Structure

The 501(c)(3) has a membership composed of permanent residents, and all permanent residents are required to be members. The membership formerly held regular Business Meetings, run by consensus to ensure that all those affected by a decision will have a say in the decision, to discuss topics needing group input or approval. In addition to topics related to the 501(c)(3), meetings also addressed topics related to the 501(c)(2), the Cattail Co-op, and the Vehicle Co-op, because all or most residents are members of those organizations (discussed in more detail below).

The Village Council, an elected group of seven villagers, now makes many of the decisions that formerly called for full-group meetings. Each co-op or organization decides whether or not to use the Village Council to make decisions on its behalf.

The Village has many empowered committees, with varying levels of decision-making, policy development, and policy implementation powers. These committees are typically made up of 2-4 members and meet regularly. Some examples of committees include: Process Team, Land Use Planning and Policy, Care Team, Membership and Residency Committee, and Visitor Team. The committee structures form an intricate, interconnected web of activity. Depending on the topic, committees are empowered to make decisions on behalf of the full group, and/or with the approval of the Village Council. The full group still meets as a whole for a few topics, including Board nominations and choosing the Village Council. Most members serve on one or two committees and donate 2% of their income to the 501(c)(3).

The Board of directors runs the nonprofit and delegates significant responsibility to the Eexecutive Director, one of several staff positions for Dancing Rabbit Inc. Other positions include a Development Director, Communications Coordinator, Webmaster, and administrative staff.

Consensus decision-making

Dancing Rabbit adopted consensus as their default decision-making process because it offers everyone a voice, improves the quality of decisions, ensures every member feels invested in the community, and builds a community culture that emphasizes deep listening, care for the commons, and meeting the needs of others. The Village Council, committees, and the Board all operate using consensus.

For a decision to be adopted, consensus requires that all members consent. Many members give consent even if they don’t fully agree with it, because consent is inherently different than full agreement. Using consensus requires that the group work hard to take everyone’s concerns into consideration and craft a decision that everyone can live with. Individuals can block a decision if their concerns are based on a value the group has endorsed and cannot block for other reasons. This, of course, requires that the group hold common values and to understand when they have the power to block. New members go through a consensus process training to build a strong base of understanding within the community. The details of the membership agreement are discussed below in the lease and sample documents sections.

Power Levels – Delegation by the Membership (usually via the Village Council)

Dancing Rabbit uses a power level structure to manage the delegation of decision-making authority and manage decision-making relationships. The membership is the body of ultimate authority (as delegated by the Board and group agreement), and is generally represented by the Village Council (VC). The VC (and other authority entities) delegate power levels to committees and staff. These are the power levels:

  • Power level 1 is the right to make a proposal to the membership. Every individual member has this power as well.
  • Power level 2 is the right to send a proposal to the membership/VC via email. If there are no unresolved objections in two weeks, the proposal becomes an actionable decision.
  • Power level 3 is the right to send a proposal to the membership via email and have it take effect immediately. If there are unresolved objections in two weeks it is automatically reversed, pending further discussion and resolution.
  • Power level 4 is the right to make decisions that take effect immediately.

These power levels are topic-dependent. For example, a hypothetical Fence Committee might have power level 4 over repairing existing fences, but only power level 2 over extending a fence, and power level 1 over building a completely new fence.

Generally, topics that have more impact on the community require more community input. Power levels can also be in relation to different groups. The normal relationship is between the empowered committee and the membership. But it can also be between staff and a committee, between staff and the VC, or between a committee and the VC.

Currently, Dancing Rabbit is operating with an elected 7 member Village Council and delegating many decision-making responsibilities to it. The membership gave the VC various duties and responsibilities, some of which it has delegated to other committees. Thus, if the Village Council had power level 4 over new fences, the Fence Committee could be given power level 2 to the VC (PL2VC) over new fences and report to them on that topic. This topic-specific governance model ensures that those who are affected by decisions have a voice in them. Plus, all committee meeting notes, decisions, proposals, and documents are open to the entire community, ensuring a high level of transparency.

Becoming a Member

Potential members apply for membership to the community. A committee reviews applications, interview applicants, and makes recommendations, generally at power level 2, to the membership via email. The membership admits new Residents who have limited rights in the community. After at least six months of Residency, residents can apply to become Members, at which point they have full membership rights. Residents have the right to live in the Ecovillage but not to lease land, and the right to attend meetings but not to block consensus. Once accepted as a Member they can lease land and block some decisions.

501(c)(2)

Dancing Rabbit Land Trust Inc. is the title-holding entity for Dancing Rabbit Inc. Its primary purpose is to hold title and lease land to residents, leaving the management and development of the land to the residents under the aegis of the 501(c)(3). 501(c)(2) organizations must be under the control of another non-profit, thus the board is the same as the 501(c)(3)’s board. In Dancing Rabbit’s case, the board has delegated land management duties and development decisions to the membership of the 501(c)(3) while still maintaining basic oversight. Sequestering the title to the land in a 501(c)(2) protects the land from any creditors and liabilities the 501(c)(3) may develop.

The 501(c)(2) leases land to residents in return for a monthly fee. The fee goes toward property tax and administrative costs. This is a “no buy-in” fee, meaning that no one has to pay a large sum upfront to lease land, which makes it an affordable option for most people. The 501(c)(2) owns the title to the land, but the residents own anything they build on the land. They are able to buy and sell these improvements amongst themselves and when the land lease is transferred. The details of the lease are discussed below in the lease section and sample documents section.

Dangers of Private Inurement and Private Benefit

When a 501(c)(2) organization has a board identical to its 501(c)(3) parent, as in Dancing Rabbit’s case, it likely must follow the same restrictions as its parent nonprofit. 501(c)(3) nonprofits are prevented from providing private benefits to people and private inurements to insiders. Private benefits are basically when the nonprofit benefits a private person or group excessively. The courts have defined private benefit as “nonincidental benefits conferred on disinterested persons that serve private interests” – American Campaign Academy v Commissioner, 92 TC 1053 (1989). Benefits to specific members of charitable groups that the nonprofit exists to serve, like low-income people, usually do not count as a private benefit. Private inurement is a subcategory of private benefit, meaning any type of conduct that results in an improper benefit to an insider (i.e., employee, board member, member, etc.). Nonprofits often run into problems with this when it comes to excessive employee compensation, but the benefit does not have to be monetary. A certain level of incidental benefit is allowed. The quality and quantity of benefit, as well as whether it is incidental to the exempt purposes of the organization are decided based on the situation and the exempt purposes the entity pursues.

The danger of private inurement arises whenever there is a contract between a member and the organization. In this case, low fee land leases present an obstacle for Dancing Rabbit, as the low fee might be seen as an improper inurement to those members. To confront this obstacle, Dancing Rabbit’s lease includes a promise by the leaseholder to further the mission of Dancing Rabbit with their use of the land, to abide by Dancing Rabbit’s Ecological Covenants, and to follow the community land development plans and land use plans dictated by the 501(c)(3). Thus, by providing low cost land leases, Dancing Rabbit secures allies and participants in its endeavor, as well as rental fees.

Dancing Rabbit’s mission is scientific and educational. The scientific aspect of creating a replicable ecovillage model requires people who are willing to abide by the mission and the community’s decisions about the land while they are living there. Part of the model is a low-fee and no-buy-in fee structure to ensure that low-income people would be able to join ecovillages built on the Dancing Rabbit model. Thus, the benefit of a low fee is incidental to the experimentation that Dancing Rabbit is conducting.

Additionally, the fee per acre is apportioned based on the costs associated with the land, such as property tax and mortgage payments.

Internal Cooperatives

To sum up so far, the 501(c)(3) organizes the scientific and educational work of the community and the 501(c)(2) manages the community’s legal rights to the land. Beyond the limited scope of these purposes, there is still much work to be done. Dancing Rabbit’s community has created numerous internal cooperatives to organize other important affairs and save money through sharing resources. Membership in these co-ops is generally not mandatory and depends on the individual needs of each resident. Residents are also free to create their own new co-ops. These co-ops take on a variety of forms, some requiring a specific kind of entity to be created.

Here is a list of some of the co-ops that exist at Dancing Rabbit:

  • Better Energy For Dancing Rabbit (BEDR) Power Co-op manages over 25 kilowatts of solar panels that produce power for the village. This internal grid is connected to the external grid, allowing the village to have power when the sun is not shining. The co-op has a net metering arrangement with the local power company, providing a revenue stream by selling power back to the grid. To stay aligned with their environmental covenants, the co-op has agreed to export twice as much power as it imports. There is a monthly fee of $8-10 per member and a $0.35 charge per kWh.
  • Kitchen/Food Co-ops: There are a number of kitchen/food co-ops operating in the village. Usually a group of people shares kitchen space, food costs, and labor (meal prep, cleaning, etc.) in order to provide meals for themselves, and their families and guests. Costs currently range from $7-9/day, depending on the co-op. Some co-ops have been open to any interested resident; others are generally closed (due to operating at capacity, and/or based on member preferences). There have been omnivorous, vegetarian, and vegan co-ops in existence during Dancing Rabbit’s history.
  • Dancing Rabbit Vehicle Co-op provides transportation for Dancing Rabbit residents, since their covenants prevent them from owning private vehicles. The co-op uses electric and biodiesel vehicles to minimize fossil fuel use. Most residents live and work within the village, so do not need motorized transportation. Walking and bicycling are sufficient for transportation within the village.
  • Cattail Co-op is the umbrella billing organization for a number of smaller co-ops, several of them mandatory. These include:
    • Village Commons Co-op – all residents are part of this co-op, which maintains paths and fences, pays village governance costs, recycling costs, and other community costs that would be difficult to split up by individuals.
    • Water Co-op: all residents are part of this utility co-op.
    • Humanure Co-op and Shower Co-op: these two co-ops cover common restroom facilities. Since some people have their own composting toilets and/or showers, not all residents are part of these co-ops.
    • Digital Coyote and Howling Coyote: these two co-ops provide internet and phone access for community members who do not have their own services.
    • CASA co-op: a co-op that manages the use of the La Casa de Cultura building.

ELMS – Local Currency

The Dancing Rabbit community has created a currency, called ELMs. With this currency, members can pay for many of their daily needs. This currency falls under the purview of the 501(c)(3). The ELM system is a democratically-organized system of exchange which is a version of a Local Exchange Trading System (LETS). ELMs are an electronic currency and although there is a capacity for printed scrip, this means of exchange is generally not used. The currency is managed and accounted for by a version of the open source software “Local Exchange.” Everyone has an electronic account where their balance and transactions are recorded. They can send ELMs to others and these transactions are recorded in real time. To improve transparency and accountability they can be instantly checked by the transactors. US dollars may be exchanged for ELMs, and vice versa. The exchange rate is one to one.

Everyone starts out with a zero account balance and no one can maintain a negative balance due to legal concerns over using debt as a currency (discussed below). Some organizations, though, are allowed by the community to carry a negative balance in their ELM account and the records of this are made public. This is, in effect, an interest free loan from the community. The 501(c)(2) uses this ability to smooth out cashflow problems that it used to have, namely that property taxes are due before a yearly grant from the USDA Conservation Reserve Program is received.

This negative balance is one way that ELMs can be created.   The other way is through conversions from US dollars. Around 40% of the current transactions are converting US dollars into ELMs and vice versa. This is the major way that people are able to create initial positive balances, and once those positive balances are created, ELMs are recycled constantly throughout the community.

The entire ELM system also must keep in balance. When ELMs are created through a US dollar exchange with the central exchange, the US dollars are held in an account. Note this is different from the case where two individuals swap a dollar for an ELM, no ELM is created in that instance. The entire volume of ELMs in the system must equal the total number of US dollars held in the account plus any negative balances held by organizations. At the time of writing, there were 92,000 ELMs in circulation and $65,000 in the bank account. There was $27,000 of negative balances held by organizations, thus all ELMs can be traced back to their creation: 92=65+27. If this ever gets out of balance then the system immediately shuts down as a safeguard against being hacked.

For residents, ELMs are relatively easy to use compared to US dollars and there are no fees for transactions like there are with credit cards and loans. Members only need to log into the internet to send money to the other party. This encourages people to shop locally and to utilize the skills of other people and organizations that accept ELMs. ELMs are taxed the same as dollars and must be reported to the IRS. Workers paid in ELMs must pay taxes on them as anyone paid in dollars.

The ELM system became so widely used and valued because the Dancing Rabbit Land Trust started accepting ELMs as payment for lease fees, which every member has to pay. This institutional buy-in gave ELMs value to everyone because everyone had a use for them. This lowered the risk to people and organizations who wanted to start accepting ELMs, because they knew they could use them to pay the lease fees if nothing else. And as the currency started to be accepted at more places, it started to flow around the community. This cycle built to the point where everyone’s daily needs can now be paid for with ELMs.

Additional source for this section: http://www.ecovillagenews.org/wiki/index.php/Ecovillage_Economics:_Dancing_Rabbit%E2%80%99s_ELM_System

Concerns over Debt as a Currency

Members of Dancing Rabbit received advice from a lawyer who was concerned about their use of debt as a currency, so they have stopped allowing individuals to take on debt balances. In researching this question, there were a number of names describing currency that may apply to this, including Bills of Credit, circulating private debt, private currency, private money, scrip, banknotes, monetary instruments and possibly prepaid access. Congress has likely passed laws to regulate how banks and other private parties operate in relation to these kinds of currency. Further research is needed in this area. Out of an abundance of caution, Dancing Rabbit has elected to not allow individuals to go into debt in ELMS until further research can be done to ensure that they are acting in accordance with the law.

The term Bills of Credit is used by the Constitution, and States and the Federal Government are prevented from issuing “bills of credit” by the Constitution. For states, this is Article 1 Section 10. For the Federal government, the court has read this restriction in because the ability to issue bills of credit was in the Articles of Confederation but not in the Constitution. A bill of credit is a debt instrument (like a loan) that is intended to circulate as a currency of equal value to the legal tender that the state promises to pay at a future date. An example of this is a bill of credit created by the Continental Congress that said “This Bill entitles the Bearer to receive THIRTY Spanish milled Dollars, or the value thereof in Gold or Silver, according to a Resolution passed by Congress at Philadelphia, Sept. 26 , 1778.” So the value of the bill itself is in a separate currency. (Source: http://mises.org/books/rozeff_us_constitution_and_money.pdf – a kind of skewed analysis by a Professor of Finance; Craig v. Missouri, 29 U.S. (4 Pet.) 410, 425 (1830))

In the 1830s, Missouri issued some Bills of Credit, which were challenged in Craig v Missouri and Byrne v. Missouri, 33 U.S. (8 Pet.) 40 (1834). In Craig, Chief Justice Marshall stated that “A bill of credit may therefore be considered a bill drawn and resting merely upon the credit of the drawer, as contradistinguished from a fund constituted or pledged for the payment of the bill.” This seems to mean that if there was a fund to fully back up the debt instrument, it would not be a bill of credit because it symbolizes ownership of something in existence instead of a promise of the issuer to pay in the future.

In the book “A Treatise on the Law of Negotiable Instruments, Volume 2” the author, John Warwick Daniel, states that the Constitution does not prohibit private parties from issuing bills of credit, only governments. This was tested in Briscoe v Bank of Kentucky where a bank incorporated by the state issued bills of credit. The Supreme Court said that this was okay because it issued the bills on the credit of the bank and not on the credit of the state.

Money Services Business Requirement

A related issue to creating a currency based partially on debt is whether ELMs qualify as a Money Services Business. Money Services Businesses must register with the Financial Crimes Enforcement Network and follow regulations requiring, among other things, record keeping. An alternative currency may be considered a Provider of Prepaid Access and/or a Money Transmitter. Further research is needed into this.

Sources: http://compliance.csiweb.com/newsletters/february-2012-newsletter-readmore.htm; http://www.fincen.gov/news_room/nr/html/20111102.html; 31 CFR 1010.100

Lease, Residency Agreement, and Cost of Living

Lease

As was shown in the section above on legal structures, Dancing Rabbit is a conglomeration of different legal structures. All of those structures come with agreements and commitments that the residents undertake. In this section we will look at the agreements relating to land. Additionally, we will look at the cost of living and how much all of the commitments cost for residents.

Who Can Lease

Leases are only allowed to be made to member residents who have passed their trial period and been accepted as full members. This restriction can get complicated when leasing land to businesses and other entities, so currently Dancing Rabbit allows leasing to entities with at least one member in them. More restrictions may be added in the future if this starts to give too much control of the use of the land to non-residents, but so far this problem has not arisen. One advantage of this setup is that a member’s family can invest in their entity and be a partner in it without causing problems with the lease. Some group houses have formed entities to lease their property with, while others have multiple members on the lease.

Lease Requirements

The lease is made between the 501(c)(2) Dancing Rabbit Land Trust and the lessor member or entity. The land lease requires that the lessor pay a monthly lease fee. The lease fee is set by Dancing Rabbit Land Trust at $.01/sq.ft./month for residential leases, with lower rates for garden and agricultural leases. These fees pay for the expenses of the land, such as land property taxes and mortgage payments. The lessor cannot assign any of their rights without the approval of the Land Trust. However, they can allow other people to reside on the land as long as those residents sign a Dancing Rabbit Residency Agreement. The lessor also assumes all liability and risk associated with the use and occupancy of the land and if the Land Trust does have to pay something, then the lessor will indemnify the Land Trust. These provisions are to protect the Land Trust from situations that could endanger it. The lessor will also protect the land from waste and use it in accordance with the land use plan and Dancing Rabbit’s covenants. This is to protect the land from use that is considered unsustainable.

With approval from the Land Trust, a lessor may build improvements on the land, which the lessor then owns. As such, the lessor must pay property taxes assessed on those improvements. The lessor may also sell those improvements to other people, usually accompanying a transfer of the lease. Selling improvements without an accompanying transfer of the lease would cause problems for the new owner since the lessor is not allowed to give them an easement. Indeed, lessors are not allowed to grant easements, sell mining rights, adopt land conservation, or build roads, and must maintain their use within the conditions decided by the community. The lessor also receives some rights that the Land Trust can decide later to restrict, such as the right to hunt and cut timber as well as surface water usage. This is to protect the land from being used in an unsustainable way or a way that is contrary to the land development plans of the community.

Termination

The Lessor may terminate the lease as long as they give 60 days notice and dispose of their personal property and improvements. The sale of improvements is overseen by a committee to ensure that the improvements are sold at fair market value and that the value of the land is not added to the value of the building, ensuring that the land is removed from the market system. The Land Trust may terminate the lease if it is violated, including failure to pay lease fees; if the land has been harmed; if the lessor has been absent for 6 months or more; or for failure to comply with a lease arbitration judgment. The lessor has considerably more control over when the lease is terminated to allow people both security in their residency and the ability to move if they want to.

Transfers of the Lease

Cosigners can be added and subtracted with the consent of all parties involved. If the last signer dies, then the lease will transfer to the spouse or domestic partner of the signer, the children of the signer, or the other residents of the signer’s household. The Land Trust will take into consideration the last wishes of the late signer and the relative capacities of the lease inheritors when deciding who to transfer the lease to. To vest this right to the lease, a person must send a written application to the Land Trust notifying them that they would like to continue the leasehold. This provision is to ensure that families and residents can stay in their residences while still maintaining the Land Trust’s interest in the land and how it is used.

For the full text of the lease, please refer to the examples in the documents section below.

Residency Agreement

In addition to the lease, a lessor must sign a residency agreement. All residents, whether they are on the lease or not, must sign a residency agreement. The residency agreement is meant to ensure that all residents, whether they lease property or are renting from someone leasing property, will abide by Dancing Rabbit’s covenants and community decisions. Land lessors cannot rent to people who have not signed the agreement. Many of the restrictions on use present in the lease are reiterated in the residency agreement. Please refer to the full text of the residency agreement in the documents section below.

Cost of living

In line with their covenants, most Dancing Rabbit members try to live simply and at low cost. Co-ops help mitigate the cost of many services, and lease fees depend on the size of the leased plot. For each square foot of residential and garden space, the lease fee is one penny per month. Thus, an average leasehold of 2,500 square feet will be $25 per month. The lease fee rate for agricultural land is one penny per month for every 100 square feet. Please see the chart below for a breakdown of the cost of living, which Dancing Rabbit provides on their website. Required costs and fees are marked with a *.

EXPENSE DOLLARS PER MONTH
*VCC Village Commons Co-op (can be partially paid with labor) $66.25
*DR Dues (only for DR members) $5.00 minimum
DRLT Lease Fees (For people renting tent platforms or for DR members who are leasing land. Cost given is based on 2,500 sq.ft leasehold; your lease size may vary) $25.00
The above three costs are kind of like neighborhood association fees. For this you get the benefits of living in community as well as use of roads, paths, a common house, and access to DRLT land for nature walks.
RENT AND UTILITIES DOLLARS PER MONTH
Rent (estimated, and assuming there is a place for rent) $150-450
Full Shower (indoor + outdoor) $11.31
Solar Shower only $4.63
*Water Co-op $5.23
Electricity (for a single person’s small home) $11 access fee, plus $0.37/kwh $20-40
HowDi Coyote (internet + phone) $14.07
Humanure Co-op $18.16
CASA Co-op $9.49
There is a lot variation in how folks choose to meet the above kinds of needs. You can belong to co-ops for phone, internet, showers and toilet services, or you can provide your own or go without. Electricity, if desired, can be provided via an off-grid system.
OTHER EXPENSES DOLLARS PER MONTH
DRVC Vehicle Co-op mileage (Vehicles costs are based on mileage driven. Vehicle rates are $.62 per mile ($0.80 per mile for the truck). Cost given is based on 25 miles a week; your mileage may vary) $50 average
Kitchen Co-ops (includes food, kitchen rent & utilities) $7-11/day
Common House Kitchen (if you choose to eat on your own instead of joining a food coop – does not include food) $63.72
Travel Varies.

So a lessor who wants to use all of these services could end up paying less than $700.

Documents

Sample Standard Lease

Membership Agreement

Sustainability Guidelines

Bylaws

501(c)(3) Tax Return – 2014

7.   Acknowledgments

This profile was written by SELC Legal Fellow Will Pasley with input from SELC Co-Director Janelle Orsi. Special thanks to Tony Sirna and Dancing Rabbit for sharing so much information about their community.

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