Motivated by the needs of distributed air traffic management, we extend the decentralized navigation function methodology, established in previous work for navigation of multiple holonomic agents with global sensing capabilities to the case of local sensing capabilities. Each agent plans its actions without knowing (i) the destinations of the others and (ii) the positions of agents outside its sensing neighborhood. A nonsmooth decentralized navigation function is used for each agent. The collision avoidance and global convergence properties are verified through simulations.