The Town Hall is Shepherd Glen's main legal department and also home to the town records and articles of journalism. Judge Margaret Holloway presides here, and can be found working in her office despite no other staff being present, nor any member of the dwindling population of the town.
Many paintings inside the building are that of the town's original founding families and their descendants. Some are noticeably missing, specifically that of the Shepherd family. This is most likely due to their failure of upholding their part in the pact made by their forefathers, the precursor to the events in the game.
There is a room in the building where Alex can find the first serum. Collecting this will get the player the achievement "Kaufmann's Handiwork". There is also a room that is boarded up, which Alex can break through with the fire axe he obtains on his first venture into Silent Hill. Inside the room is the painting of the Shepherd founder and one of Joshua's drawings.
In the center of the building is a large rectangular room, with a large slab in the middle. It is revealed to be a door which can be unlocked using the founders' key, leading down to a small series of corridors which eventually lead to a larger room that contains four ancient books, which document the titles and duties of each of the four families. The ceremonial dagger can be found here. Alex finds a group of Nurses guarding these when he ventures into the private room.
In addition to the old books and dagger, a door is located under Town Hall. Once unlocked, it opens into a series of passages which lead to Rose Heights Cemetery.