Otter Tail City began as a trading post settlement founded by trappers who traded with Native people, with Donald McDonald locating a post on the east side of Otter Tail Lake near the Otter Tail River. By the time Minnesota became a state in 1858, Otter Tail City was the county seat, had the first land office, and gave Otter Tail County its name. In the early 1880s, millions of feet of logs were cut in Becker and Otter Tail counties along the banks of the Otter Tail, Toad, and Pelican rivers. After the county seat moved to Fergus Falls in 1872 and the RL Frazee Sawmill relocated to New York Mills, Otter Tail City declined, though at one time it had 1,200 residents, 36 saloons, five hotels, three general stores, one brewery, three lawyers, and a weekly newspaper. When the Soo Line Railroad could not run its tracks through Otter Tail City, a new settlement called Ottertail was platted, where businesses included a cement block company, a bank, a restaurant, a mercantile, elevators, a garage, and a school. Ottertail incorporated in 1904 and organized a fire department, and it consists of nearly 3,200 acres and five sections platted for expansion. Within its boundaries are Otter Tail Lake, Donald Lake, Portage Lake, Buchanan Lake, and Pelican Bay. The Creamery, built in 1921 as a slaughterhouse, later produced 353,839 pounds of butter before the building was renovated into a church and boutique. The Williams Company Store, built in 1904, housed a mercantile, an undertaker, a grocery store, and later a gift shop and deli. In late 1998, the Ottertail Lions Club commissioned Ken Nyberg of Vining to create a steel otter statue, which was completed in early 1999 and placed in a wayside park at the intersection of Highways 78 and 108. Otter Tail City was also the county's first large settlement, first platted townsite, first U.S. land office, first newspaper site, first brewery site, and first sawmill site.