A bit of research at the Dawnflower Library tells of a time over a century ago when Otari was ruled by kobolds, who either drove out the original human founders, or colonised the abandoned settlement (accounts vary), around 4594-4600 AR. They soon began luring ships to their doom on the rocky shore, which resulted in an expedition from Korvosa led by Maklanni Menhemes (ancestor of the current mayor, Oseph Menhemes) driving out the kobolds and refounding the town in 4610 AR. All records agree that the defeated kobolds swore vengeance upon the town, and have hated Otari ever since. It is now 4726 AR, and it seems their plans may near fruition...
4407 AR Following victory over the local Shoanti barbarian tribes, the City State of Korvosa is founded by colonists from the empire of Cheliax.
4544 AR The Roseguard, a band of adventurers from Korvosa, slay the evil wizard Belcorra Haruvex at her 'lighthouse' tower/keep, the Gauntlight, two days west of Korvosa. The rogue Otari Ilvashti is slain in the battle. The Roseguard survivors Aesephna Menhemes, Vol Rajani, and Zarmavdian decide to retire from adventuring, and found a port settlement just south of Gauntlight, which they name Otari after their fallen companion.
4590 AR The last of the Roseguard pass away. Otari is in decline.
4594-4600 AR Stonescale Kobolds colonise Otari.
4610 AR The notorious kobold king Yarlaip lures ships to their doom on the rocks near Otari. A vengeful expedition from Korvosa led by Maklanni Menhemes, the grand-daughter of Aesephna, defeats the kobolds and refounds the town. Maklanni decides to take advantage of the plentiful cedar groves north of town, giving Otari a new lease of life.
4623 Construction of the Otari Lumber Mill & Log Flume completed.
With its accessible port Otari soon becomes well known as an exporter of Varisian cedar to Korvosa, Veldraine and even Magnimar, far to the west, ushering in a century of prosperity.
4721 AR Threatened by invincible Rune Giants, the Kingdom of Korvosa formally acknowledges Runelord Karzoug of Xin-Shalast as Emperor of New Thassilon, with Korvosa now a tributary realm. Much gold soon flows north and east from Korvosa and the other tributary realms to fund Rune-Emperor Karzoug's war against the Whispering Tyrant, Tar-Baphon, lich-king of the Isle of Terror.
4726 AR Present day. Korvosa is in six months of mourning for the death of the much-loved King Tsadok I Arabesti (r. 4709-4726 AR). It is widely believed Tsadok died from years of over-exertion of carnal appetites with his Queen, Sorshen, now ruler of Korvosa. Queen Sorshen announces that her new kingdom is to be known as Korvosa-Eurythnia, the 'Realm of Love'.