"It is a local party."
Translation:C'est une fête locale.
"il est" would be acceptable if the sentence expressed a specific meaning:
"il est une fête locale qu'il ne faut pas manquer, la fête des fleurs" (there is a local party you should not miss, the flower day)
In that case, "il est" would be impersonal.
But "it is a local party" is constructed with "it" representing "party" that cannot be translated to "elle est" because of the rule you will find very well explained here: click