The idea of local communities and hyperlocal news are around for a while already. Local activities may happen on an area level or even within buildings and facilities (s.a. LifeAT). The latter comes close to intranets and home automation and is useful for information and reduces costs for the distribution of news.
Local news become a hot topic again, because of economical reasons and shifts at the newspaper market primarily affecting small and local publications. This leads to vacant spaces, which might be filled by online publications. In opposition there is a dilemma of reaches, monetization and the quality of content. Mostly the business model relies on advertising, which is controversial, too. Large companies do want reach and local advertisers have not embraced internet advertising yet.
But the trend towards local content has been proven by search engine statistics. What is needed is a business model. There are already various projects and solutions around. Examples are user generated content (Placeblogger), editorial content (EveryBlock, outside.in) and ecommerce solutions (Verticlans). Lately another concept has been realized by The Printed Blog, which uses internet content for print publications.
Most promising seems to be the ecommerce approach with classifieds. This approach is based on a proven business model. It has local roots and even user generated content, the classifieds. By thinking about a modern social media approach, this content may become easily enriched by further contributions and editorial content. By the ongoing development and ease of use local content probably will become promising like location based content on the opposite level.