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Salamanca was a quiet college community on the outskirts of Paragon City, no gangs had any interest in pumpkin farms and hilly country. That simply would not do. During Halloween 2004 a battle between various mystical villain groups for a powerful tome weakened the barrier between the real world and the spirit realm, spreading werewolves, vampires, witches, and pumpkin-headed Fir Bolg across the city. After a few days things seemed to have returned to normal, but it was too late. The Red Caps, a group of evil gnomes, had found an opportunity to pull more of the world into their realm. They had done it once before: the Roanoke colony of Virginia, the famous lost colony of Croatoa. All the male members of that colony were long since killed, but the female members survived through witchcraft.
Thus the stage is set for Salamanca to become ground zero of a mystical war. On one side there's the Red Caps and their slaves, the Tuatha de Dannon, on the other, the Cabal and Fir Bolg. And in between, the farmers and students of Paragon University. Oh, and did we mention that this branch of the university focused on mystical studies?