When I was helping my old tai chi instructor start his school, we called the "Neighborhood" editor of the newspaper and they came and did a story and photoshoot for the paper--free, and generated interest.
I also called the local tv news station and they came and we had a spot on the 6:00 news "Local Interest" segment--free, and generated much interest.
I know that one of our local radio stations will run free ads for local non-profit events.
We also targeted other interest areas where people with even a passing interest in tai chi might be found; flyers in health food stores, massage/holistic therapy schools, physical therapists offices, etc. Put flyers up but put them where people interested in what you offer will see them.
Get in good with other martial artists in the area. We often refer people to other schools if they call us looking for karate or kickboxing etc. See if you can get other places to refer people to you. They may just not know you're there.
Also, check out this thread
. If I remember correctly it's chock-full-o' good ideas.