This article was published in the Spring 1996 issue of Formulations
by the Free Nation Foundation
 
A Model Lease for Orbis
 
by Spencer Heath MacCallum
 
Working Draft 10-15-95
 
Copyright © 1995 by Spencer H. MacCallum

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Outline
Prefatory Note
I. WHEREAS...
II. ORBITAL FURTHER COVENANTS AND PROMISES:
III. P COVENANTS AND PROMISES TO ORBITAL:
IV. ORBITAL AND P FURTHER MUTUALLY AGREE:
 
 

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 Prefatory Note:  Long-time libertarians and followers of the new-nation movement may recall hearing of Atlantis, the attempt by Werner Stiefel to found a proprietary community on a coral formation in the Caribbean outside the territorial limits of Haiti during the mid-1960s.  The following article began as a commission in exchange for equity in Atlantis.  Unfortunately, Stiefel's efforts came to nought when he was chased off the site by Duvalier's gunboats.  Although nothing remains of Atlantis, the master lease for this proprietary community has survived and has been revised during the intervening years.  Since Stiefel wanted to retain a low profile while he was building Atlantis, when the lease was published it was promoted as being for ORBIS, the name of a hypothetical proprietary community in outer space.
 The author, Spencer MacCallum, is a social anthropologist who has specialized in the study of proprietary communities.  He has followed in the footsteps of his grandfather, Spencer Heath (1876-1963), who originated the idea of proprietary administration of all public services, such as roads, common areas, and police protection.  Both Heath, in his major work, Citadel. Market and Altar:  Emerging Society (1957), and MacCallum, in The Art of Community (1970), have explored "the rationale of a community in which all matters of common concern would be administered contractually, according to voluntary agreements, without recourse to taxation or other institutionalized coercion."
 Proprietary administration of public services is not some "pie-in-the-sky" idea.  In his book, Public Goods and Private Communities (1994), Dr. Fred Foldvary offers empirical evidence for and theoretical justification of proprietary communities.  In addition, there is a growing body of practical experience in this area embodied in what the real estate industry labels "multiple-tenant income properties," such as hotels, shopping centers, marinas, industrial parks, residential apartment communities, medical and professional centers, and combinations of all of these.  Their significant structural feature is found in the fact that the land on which they are established remains in undivided ownership with the component parts leased or rented instead of sold.  "The developer's intact interest in the whole, i.e., the single title under which he planned and built the development, survives to become the basis for the ongoing administration of the community."  The proprietors of such communities are in the "business of manufacturing and marketing 'optimal human environment'."  The proprietor creates land value by manufacturing and merchandising the "environment" of the community he has built.  His "interests are directly aligned with the general well-being and prosperity of his tenants" because his rental or lease income can only be generated out of their productive efforts.

In a lengthy introduction titled, "Drafting a Constitution for Orbis," the author of this contract has identified the basic principles he has used to formulate the lease provisions.  In no special order, they include the following:
 

Voluntaryists should find these ideas exciting, as they offer a non-political and non-electoral method for maintaining social cooperation and peace.  The following draft of the lease is appended with explanatory notes (numbered in sequence) which indicate how it has taken on a life of its own during the last 30 years.  Reader comment is invited "to lessen the weaknesses and build on the strengths of this first attempt at a [non-statist] constitution for a permanent community in space," or anywhere else for that matter.
 MacCallum's lengthy and highly informative preamble to the lease, including a bibliography of the proprietary community, is available without charge from him at Box 21, Pine Hill, New Mexico  87357 (Tel. 505-775-3750).  Those who write rather than phone should include a phone number (which Mr. MacCallum promises to keep confidential) since it is his policy to speak with people and be informed of the nature of their interest before sending out material to them.  (This unusual policy has been highly successful, he says, not only in terms of self-education but also in terms of the friendships that have resulted.)  Earlier versions of the lease were delivered as a lecture at the Twenty-third Annual Meeting of the American Astronautical Society, Airport Hilton Hotel, San Francisco, CA, October 20, 1977; and published in Rampart Individualist, Winter & Spring 1981.

This "Prefatory Note" was prepared by Carl Watner in conjunction with Spencer MacCallum.  It will appear in a forthcoming issue of Watner's publication The Voluntaryist, "the only pure free-market newsletter to eschew electoral politics and violent revolution."  (Sample issues available for $1:  Box 1275,  Gramling SC  29348.)
 For permission to recopy "A Model Lease for Orbis," please contact  Spencer MacCallum.  He will always give permission, but he wants to know who is copying it, who is interested.
 
 

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A MODEL LEASE FOR ORBIS
  I. WHEREAS ORBITAL COMMUNITIES ("ORBITAL"), owner of the proprietary community known as Orbis, is engaged in the business of developing, maintaining and promoting the growth of human environments conducive to the fullest enjoyment of community living, and of marketing such environments by leasing to its members exclusive sites through the occupancy of which they can obtain full access to and enjoyment of same, and

 

WHEREAS PERSON ("P") desires membership in the community of Orbis for the purpose of residing and/or engaging in business there,

 

NOW THEREFORE ORBITAL, for the consideration set forth below, conveys in perpetuity to P, his heirs and assigns, subject only to the terms and conditions of this agreement, full membership in the community of Orbis, which membership conveys equal access with all other members to its common areas and facilities and, in addition, exclusive occupancy of a space, which in this case shall be that space, or space of equivalent character and utility, known as [property description follows, reserving sub-surface rights and air rights above 000 meters].

 

Note 1. The absence of a fixed date of termination is for several reasons. With a safeguard clause that permits Orbital to move the occupant to another site under certain conditions (II.D), the community retains planning flexibility a consideration of ever greater importance in a culture of accelerating technological change. At the same time, the individual gains the security of permanent membership in a community, provided only that he continue to observe the terms of that membership. Such tenure without specified term is the functional equivalent of citizenship, which is likewise without term, in the established nations of earth. Although no longer recognized under Anglo-American law, such perpetual leaseholds are traditional and customary in many parts of the world.

 
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II. ORBITAL FURTHER COVENANTS AND PROMISES:

 

A. To guarantee P quiet possession of the space reserved for his exclusive use and, subject only to the terms and conditions of this agreement, freedom to make full and undisturbed use of that space and of the public portions and facilities of Orbis enjoyed in common with others. ORBITAL promises not to impose or permit to be imposed within Orbis any tax on the person or property of P or of anyone else in Orbis. The word "tax" shall be understood to mean any imposition of any levy, fine or assessment other than as provided for by the terms of this or other agreements voluntarily entered into.

 

B. To act at all times with utmost diligence to secure the safety of persons and property in Orbis, including specifically but not limited to the following:

 
 

1. Promotion of research into and wide public dissemination of information concerning:  
Note 2. The membership/lease agreement does not forbid specific kinds of behavior that might endanger or be a nuisance to others, since this would call for policing inspections and enforcement by Orbital. As the community proprietor, Orbital is already such a big fish in this pond that it seems wise to avoid or minimize situations that could lead to confrontations with members. Instead, the member covenants (III.C) to exercise all due diligence to avoid creating a nuisance. In the event a dispute arises between members, it will go first to mediation and then to arbitration (IV.E), and a private arbitrator will determine whether one or the other acted unreasonably. If the arbitrator finds that a member has acted otherwise than reasonably, then Orbital will be free to act on that information, which will then be public knowledge. The issue of reasonable behavior turns partly on the question of whether the defendant was sufficiently informed to have known how to behave in the situation, or whether he acted in ignorance and could not reasonably have had access to such information. Consquently, a fundamental role of Orbital, a basic public service, will be to ensure that up-date technical information about the "how" of community living is readily and easily available to everyone in the community.

 

a. Health and safety.

 

b. Available insurance coverage of all kinds.

 
c. Available technologies of all kinds for the abatement of measurable nuisance effects

such as noise, smoke and other particulate matter, vibration, noxious gases, odors,

glare and heat, fire and explosive hazards, traffic, and waste effluent.

 

d. Private means of dispute resolution.

 

2. Reimbursement, through rent remission or otherwise, of uninsured losses resulting from fire, theft, or bodily injury suffered in the public areas of Orbis, or in the private areas

when said fire, theft or attack originated outside those areas and was not caused by negligence of P or his tenants, guests or invitees. Provided, however, in the case of property loss, that P has apprised ORBITAL beforehand of any unusual amounts of property in his possession and has taken reasonable precautions for its safety.

 

Note 3. This provision has long precedent at common law, where an innkeeper is held to be insurer of the safety of persons and property of his guests.

 

C. To promote the systematic collection and public dissemination of marketing statistics and

related data and in other ways to encourage and assist members to make informed land-use decisions.

 

Note 4. In lieu of zoning, building codes or other land-use restrictions, this clause seeks to achieve the same end by an extension of the public-information services of Orbital noted earlier (II.B.1). The assumption is that inappropriate land-use decisions generally result from inadequate information, and that if such information is readily available, the nonconforming land uses will be small enough in number and in kind that the community will be able to live with them. They will be a small price for avoiding the inspection/enforcement syndrome of duties under the conventional restrictive approach.

 

D. If, in the judgment of ORBITAL, its own interest and those of the members in general would be served by ORBITAL resuming possession of all or any portion of the leased site and allocating it to a different category of use, such as from industrial use to residential or commercial use, and if ORBITAL for this reason elects to make such a land-use change, then ORBITAL promises to:

 

Note 5. This right of Orbital might never have to be exercised for a variety of reasons. A common misapprehension is that nonconforming land uses cannot be tolerated, when actually they seldom hurt an over-all plan; the classic hold-outs, such as the brownstone tobacconist at Rockefeller Center, do little more harm than offend our sense of symmetry. Nor do such nonconforming uses very often last beyond a person's lifetime, if that long, personal circumstances being as changeable as they are. Moreover, where people have all the facts they need to make a rational decision, they will generally do so. That being the case, in Orbis, where information will be more available than elsewhere, holdouts will be even more exceptional. In Orbis, also, in the absence of tax and regulatory features that elsewhere tend to "freeze" existing land uses (by creating incentives, for example, to hold onto property to avoid capital gains tax liability) the market as a whole will be more responsive to changing conditions. Nevertheless, it is of fundamental importance to the community that Orbital reserve the right to move a member from one site to another of equivalent character and value. The conditions it would have to meet, however, assure that such a right, if exercised at all, would not be exercised lightly.

 

1. Give P not less than two years written notice.

 

2. Grant P a right of first refusal, during the period of notice, to himself undertake the land use envisioned for that site.

 

3. Offer P, at the same rent for the balance of the unexpired rental period, alternative space in Orbis equally well situated and otherwise suited for the purpose for which P was using the space originally allocated.

 

4. Reimburse the full appraised market value of P's fixed improvements on the site, constructed prior to the time of receiving notice, or, at the election of P, to reproduce the same or comparable improvements on the new site.

 

5. Assume the full cost of moving P and his personal and business belongings from the old site to the new site or elsewhere in Orbis.

 

6. Compensate P for any business loss due to closure or disruption during the move, except any that might have been caused by carelessness or neglect on the part of P.

 

E. To conduct its business always in a manner calculated to maximize the total value, as income property, of its basic productive capital consisting of the site of Orbis.

 

Note 6. The ultimate protection of the members is that Orbital will be operated as a business and hence more rationally than if it were not. If it were operated for any other reason ideological, charitable or whatnot there would not be this protection. The impersonal, rational pricing mechanism of the market is the ultimate safeguard of justice in a civilized community. The rental income from a proprietary community affords a quantitative measure of its success as a community and a yardstick by which to measure proposed improvements. It introduces into community planning a rationality that has hitherto been lacking; for it offers in principle a quantitative measure and feedback for ascertaining whether and by how much a given undertaking adds to or detracts from the common good the success of the community qua community.

 

F. To have in effect at all times adequate insurance or reserves specifically to compensate P for any loss or inconvenience that P might suffer as a result of ORBITAL violating any of the terms of this agreement.

 

Note 7. This was suggested by a similar provision in the constitution of Ciskei, south Africa, and is intended as a further protection against tyranny--the main protection being the business nature of the public enterprise (II.E). This provision bonds Orbital to perform its promises to the members, in effect insuring the constitution of Orbis.

 
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III. P COVENANTS AND PROMISES TO ORBITAL:

 

A. To pay the annual ground rent of the leasehold, exclusive of improvements thereon, to ORBITAL or its successors or assigns, in equal amounts on or before the first of January and July of each year.

 

B. To exercise due diligence to avoid endangering the health, safety and property of others, this and the following covenants C, D, F, G, H, I and J to run to the benefit of the present and future members of Orbis, their tenants, guests and invitees.

 

Note 8. This would include actions not only within Orbis, but also while traveling abroad, actions that might compromise the security of Orbis or be considered provocative by one or more governments on earth, leading to the possibility of sanctions or retaliatory action against Orbis. In other words, members would have to observe the strict political neutrality of Orbis. "Reasonable behavior" again would be the criterion or test.

 
 

  D. To carry liability insurance against any loss or injury he or his tenants, guests or invitees might cause others in Orbis.   Note 9. John Yench, of Long Beach, California suggested this and the following insurance clauses to eliminate any need for health and safety inspections and policing by Orbital.

 
 

  Note 10. This clause insures the member against loss of membership from inability to pay rent because of accident, injury or other calamity. By the same token, it protects against the member or his dependents becoming a burden on the community, and it protects other members who might be creditors or contractual partners of the member in question.

 
 

  Note 11. Here P insures his word as Orbital does its word in II.F. This provision shifts from Orbital to the insurance provider(s), in whose interest it now is, the burden of inspections and policing with respect to security (see III.B and accompanying explantory note 8). The insurance providers in turn are closely monitored by the consumer rating services (III.G). To complete the picture, no one rating services included escapes the eye of the ever watchful equities market.

 

G. To purchase insurance in conformance with this agreement only from firms carrying the highest certification from a major consumer rating service, and in all such policies to name ORBITAL as co-insured.   Note 12. Because insurability is the foundation stone on which the security of Orbis rests, it is essential that the insurance firms relied upon be real and reputable. Emalie MacCallum suggested consumer rating as an alternative to Orbital maintaining a list of approved companies. The market could then operate more freely, whereas certification by Orbital would be tantamount to licensing, which would be in restraint of trade.

 
 

  Note 13. This provision is responsive to Mançur Olson's thesis in The Rise and Decline of Nations (Yale University Press, 1982) and is intended to forestall the formation in Orbis of cartels in restraint of trade and of special-interest groups that would restrict occupational entry. The profound importance of this provision is impressively developed by Olson. It also harmonizes with E.C. Riegel's thesis in The New Approach to Freedom (Heather Foundation, 1976) that competition is the touchstone of individual dignity. It is a premise underlying this model constitution for Orbis that unrestricted competition will help to promote an energetic and prosperous population, and that this, in turn, is the basis of healthy land values.

 
 

  Note 14. The test, again, is reasonable behavior. This explicit rule confers a psychological and cultural benefit in Orbis: By removing any and all violent action from the category of "right and justified behavior," the individual is challenged in every case to look for peaceful means of resolving differences. The working assumption is that there are always peaceful solutions to differences. The challenge is to find them. While such an assumption cannot be proved, it is like the scientist's working assumption that the universe is rational and understandable; such an assumption is productive of discovery. Physical harm inflicted in any situation whatever is, in this view, considered tragic. The person who was unable to avoid inflicting it is not to be condemned, any more than the unsuccessful seeker after scientific truth. He is rather to be looked on with sympathy and compassion for his shortcoming in a situation that resulted in tragedy for a fellow human being. It is hoped that this view will become a part of the cultural outlook of the new community.

As for Orbital itself, it is the proprietary organization's contractual duty to make Orbis safe for its members. If Orbis or any part of it is threatened and Orbital can think of no alternative but to use force to protect it, then it will be up to Orbital to protect it forcibly. But this will be looked upon as a failure, necessary only because Orbital knew no other way to handle the situation. It will be considered improper means and consequently will establish no precedent for using force in the future. A worse failure, of course, would be to fail in its prime responsibility of protecting life and property in Orbis. We must not forget Gandhi's pragmatic injunction: "He who cannot protect himself or his nearest and dearest or their honour by non-violently facing death, may and ought to do so by violently dealing with the oppressor. He who can do neither of the two is a burden. He has no business to be the head of a family [read "community"]. He must either hide himself, or must rest content to live forever in helplessness and be prepared to crawl like a worm at the bidding of a bully." (Young India, November 10, 1928)

 

J. To be responsible at all times forthe actions of his tenants, guests or invitees as if those actions were his own.       (to outline)   (to top of page)

IV. ORBITAL AND P FURTHER MUTUALLY AGREE:

 

A. That this leasehold shall be P's property to sell, sublet, encumber or otherwise deal with as he sees fit, subject only to the terms and conditions of this agreement and to ORBITAL's approval, which shall not be unreasonably withheld. If this leasehold is to be transferred to a third party or parties, then this original agreement should be returned to ORBITAL with the proposed transfer endorsed thereon. When and if the transfer is approved, a new agreement will be issued to the transferee. In the event P rents or sublets any or all of his space, his agreement(s) with his guests or tenants must agree with and in no way be inconsistent with any of the provisions of this agreement.   B. That the starting rent for the site herein leased shall be 0000 valuns per annum,

 

Note 15. The reference to "valuns" as the unit of exchange merely indicates that a non-political monetary unit, as discussed in E.C. Riegel, Flight From Inflation: The Monetary Alternative (Heather Foundation, 1978), undoubtedly will be used. The actual instrument(s) used in exchange will be determined, of course, not by Orbital, but by the consensus of traders of whom Orbital will be but one.

 

and that this rent shall be revised every five years to the then market rental value of the site, less a ten-percent reduction to P as a preferred tenant. Market rental value for this purpose shall be appraised by three disinterested parties selected as follows: ORBITAL and P each choosing one of three persons named by the other and the third to be selected by these two. ORBITAL and P shall then each submit to this panel of three their independent appraisals of the rental value of the site for highest and best use together with supporting evidence, and it shall be the duty of the panel to study the appraisals submitted and choose one or the other, as it stands, without modification.

 

Note 16. This form of arbitration, which is suited to cases where the facts are not disputed, was suggested by the late Dr. F.A. Harper, of Atherton, California. It has the virtue of bringing the parties closer together in their respective claims rather than farther apart, as in the adversarial system where each takes an extreme and opposite position in the hope that eventual compromise will favor him. Under this arrangement, each party makes his "solution" as close to the other party's claim as possible in the hope that it will become the decision in the case.

 

ORBITAL will make its leasing records freely available to assist the appraisal process.

 

Note 17. This small but not-to-be-overlooked provision was gleaned from an intriguing paper, "That We All Might Be Rich: An Investment Proposal for Georgists," privately circulated by its author, Dan Sullivan, Pittsburgh PA (412-621-3499), about 1992.

 

Should P fail to select an appraiser within 30 days after ORBITAL has submitted three names to him, then ORBITAL may name an appraiser for him from among the names submitted. Should either party fail to submit an appraisal, then that of the other shall obtain.

 
C. That if rent payments fall into arrears for ten days, P will incur a late penalty of ten percent of the balance due, and that after 30 days of arrears ORBITAL may, upon 24 hours written notice, terminate this lease and resume possession.

 
Note 18. Property-management experience teaches that rent collections must be handled promptly and strictly. It is no favor to a tenant to allow him to get into arrears, but rather tends to create an unmanageable situation. In some cases advance arrangements might be made for later payment, the leasehold might be financeable in the mortgage market, or insurance might play a role. In any case, rent schedules should be strictly regarded.

 

In the event of such termination, ORBITAL shall return any rental balance pro-rated to the date of the written notice. Compensation for P's fixed improvements on the site shall be established in the manner set out in Paragraph IV.B, above.

 
D. That this agreement may be modified or terminated at any time by mutual consent, or that it may be terminated by either party, alone, upon appropriate notification as follows:

 

1. P may at his discretion terminate this agreement and quit the leasehold without any further liability for rent, under any of the following circumstances:  
a. Upon six months written notice, in which case the removal or sale of any improvements shall be P's responsibility.

 

b. Upon 20 days written noticefollowing the violation or neglect by ORBITAL of any of the terms of this agreement, and especially the commission of any act or threat of violence upon P, his tenants, guests or invitees, by ORBITAL or its appointed agents, or their entry on the premises without express permission by P, or the imposition of any tax upon the person or property of P, his tenants, guests or invitees. In the event of such termination, ORBITAL shall

 
 

1) Return any rents paid ahead by P, pro-rated to the date of the complaint, and shall compensate P for the value of his site improvements, such value to be ascertained in the manner set out in Section IV.B, above.   2) At its own cost safely transport P and anyone else residing at the time on P's premises, together with their personal belongings, to any place of their choosing. If the cost of transportation to said place exceeds that of transportation to P's point of origin before coming to Orbis, P shall pay the excess.  
Note 19. This clause is responsive to David Friedman's fear that the possibly high cost to a tenant of leaving a settlement remotely situated in space might provide a temptation for the proprietors to renege on their agreement by unilaterally raising rents. Insurance provided for in II.F protects P by underwriting his return transportation should Orbital go further and renege on that as well. For Orbital to disavow its agreement, however, would be tantamount to relinquishing its business, so that in practical terms the probability would be remote. Moreover, a poorly managed income property soon attracts the attention of those in a position to buy controlling interest and restore its productivity.

 

2. ORBITAL may, at its discretion, resume possession of the leasehold under any of the following circumstances:

 

a. Upon 24-hours written notice following P's failure to pay rent in full for a period of 30 days after it has become due and payable. In that event, the compensation for P's fixed improvements shall be established in the manner set out in Section IV.B, above, and shall be paid to P by P's successor, if such there be within a year, and otherwise by ORBITAL.   b. Upon fulfillment of all the conditions set out in Section II.D, above, when in the judgment of ORBITAL its interests and those of the residents of Orbis generally would best be served by ORBITAL's resuming possession of the leasehold and disposing it to a different category of land use.   c. At the end of any negotiated rental period following prior written notice of not less than one year, in the event of repeated complaints by other residents of disturbances of the peace. Provided, however, that if in that period no further complaints are received, the notice shall have no effect.    
E. That any dispute with any person in Orbis that cannot be resolved informally by the parties to it, including any dispute that might arise over the terms of this lease or the performance of either party to it, shall be settled by a mediator or, failing that, a neutral arbitrator in accordance with the rules and regulations of the XYZ Arbitration Association. The parties agree to be bound by the decisions of the arbitrator.

 

Note 20. We can assume, whenever there is sufficient market demand, not only that arbitration companies will come into existence equipped to provide a complete dispute resolution mechanism entirely outside of any political system, but that arbitration associations will compete to provide the fairest possible adjudication of disputes. Much of what we call "due process" the right to confront and cross-examine witnesses, questions about the admissibility of evidence, processes of appeals, and the like, which on earth are handled within the political court systems might be transferred in space habitats to an arbitration system.

Many people are presently weighing the feasibility of competing private companies offering services of justice outside of any political system. See, for a single example, Murray N. Rothbard, For a New Liberty (New York: Macmillan 1973), pages 219-252. For an early treatment of the question, see Francis D. Tandy, Voluntary Socialism (Denver: Tandy 1896), pages 62-78. See also the following relevant discussions: A.S. Diamond, The Evolution of Law and Order (Westport CT, Greenwood Press 1975); Bruno Leoni, Freedom and the Law (Princeton NJ, Van Nostrand 1961); William C. Wooldridge, Uncle Sam. the Monopoly Man (New Rochelle NY, Arlington House 1970), Chapter 5, "Voluntary Justice," pages 94-110; and Bruce L. Benson, The Enterprise of Law: Justice Without the State (San Francisco, Pacific Research Institute for Public Policy 1990). D

 

Spencer Heath MacCallum is a theoretical anthropologist and author of The Art of Community. He directs the Heather Foundation which administers, among others, the intellectual estates of Spencer Heath and E. C. Riegel.

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