I am by no means an expert on the subject. But reading your question I was immediately struck with the thought that local vendors in that town would be willing to pay for advertising on the site.
Of course, like any medium they would consider for advertising, you need to demonstrate that the site attracts a sufficient number of visitors.
Even I am also new to this but I have heard that many people become an affiliate on the website and get the commission. This is how you can earn money.
Affiliate programs are great if you have a highly transactional site where purchases are a logical next step but on a local site, the goal is rarely to buy something right away, or at least not online. Thus working to secure sponsors on a viewership basis will generally produce better results.
Remember, you're best chance at success comes from showing authentic local info so while advertisers can fit in, don't taint the information pool by selling away your credibility/