A small town main street environment is carefully nurtured as part of Watertown’s identity. The city was a recipient of a Small Cities Development grant in 2004. The city was awarded approximately $500,000 in grant money to rehabilitate downtown business and residential buildings.

The city has enhanced the downtown area with the construction of a boardwalk along the scenic Crow River as it flows through downtown, and a lighted trail connection between the Luce Line Trail and City Center Park.