Where and when should the community be engaged in a new public artwork commission?

Community engagement takes patience and time, and the best results are often achieved by early and frequent communication with a community.  If engagement only comes at the very end of a public art commission, then it is unlikely to be as productive or meaningful to that community, and indeed can have the opposite effect, serving to highlight the differences between commission and community.
So, ideally, the community should be engaged early and often, and one way to ensure that happens is to include community members on the selection committee, and throughout the commissioning process.  Public art programs have also found success by involving the community in programming related to the new artwork commission, which has the benefit of educating and engaging a local populace.
It is also important to consider the location of engagement: try to meet your community where that community normally organizes (a local coffee shop, neighborhood space, or popular happy hour, for instance).  Meeting at such a location will encourage turnout and participation at meetings, and it demonstrates a vested interest in that community far better than asking community members to travel to a government building on the other side of the city.