This from the net. Yes, It's legal for a community to print their own money. Local currency is a way for local economies to help keep money earned and spent in the local area in the local area. Ithaca is a great example.
Money has mobility.
It knows no geographic loyalty and thus has a centrifugal force on family, neighborhood, community, and increasingly, our entire national identity. And it seems to be working. Hours are accepted in 300 local businesses and have the enthusiastic backing of the chamber of commerce and the mayor, who accepts them for meals in his town center restaurant. It feels terribly good. The idea is that the stores there will pay the workers with it, and will accept it in exchange for good and meals, etc.