"local7" is just an optional field to specify the logging facility for use by the destination syslog server. It does not impact the fact that syslog messages are sent via udp/514.
"Traditional" Unix-based syslog servers have a concept of "local<n>" where n can be used to designate the location for the syslog files with in a directory or folder structure. That is typically governed on the receiving server by settings in the syslog.conf file.
Please refer to the last posting in this thread for more info:
https://supportforums.cisco.com/discussion/9551901/what-logging-facility-local7
