Driven by entrepreneurial residents, housing development has helped transform the southeast South Dakota town into a rural bedroom community for Sioux Falls and Mitchell.
CANISTOTA, S.D. – The success story unfolding in this eastern South Dakota city shows how a commitment to housing development can break the pattern of decline afflicting many rural communities across the state.
Long known as home of the renowned Ortman Chiropractic Clinic, the conversion of Canistota from a largely isolated, agriculture-focused small town into a thriving regional housing hub also reveals how the commitment, fortitude and ingenuity of a few motivated individuals can be transformative in a fairly short period of time.
Kaitlyn Killoran remembers well the negative vibes she felt in Canistota when she first took a job a decade ago as technology director of the local school district.
"My first impression wasn't that nice," said Killoran, 37. "I didn’t like the look of the town initially because there were a lot of rundown houses, and they would overshadow all the beautiful homes and parks you find when you really get to know the town."
Since then, Killoran has transformed herself from an educator into a developer and property manager who is playing a major role in helping Canistota grow now while also paving the way for a prosperous future.
Killoran and her husband, Jake, have bought two hotels and a rental home and have built two twin homes that were sold to retirees and a young family. The couple has acquired land to build six more twin homes in the near future.
Their efforts to expand housing opportunities in the city of 711 people have been bolstered by another local developer, Mike Kerrigan, who has remodeled eight dilapidated houses and is building a 16-home subdivision on the city's south side.
The Canistota Development Corp., meanwhile, has encouraged commercial and retail development while also beautifying the town by removing several abandoned homes.
At the same time, the Killorans are in the early stages of building a $4.5 million, three-story hotel, restaurant, office space and apartment complex that will sit next to the Ortman clinic and serve its substantial pool of patients as well as potential new residents of Canistota. The complex will replace the Ortman Hotel that was razed in 2023.
This story is part of an ongoing South Dakota News Watch series called Engage South Dakota using storytelling, crowdsourcing and community engagement to identify and share potentially replicable housing solutions.
Each story includes the community's response, insights to be learned, evidence of whether the ideas are effective and limitations on the efforts.
Key takeaway for this story: Building new housing and rehabbing older properties makes room for new families that form the backbone of a thriving rural community.
Read about other South Dakota housing solutions.
Those combined efforts are one reason why Canistota, founded in 1883 as a railroad town, is in the midst of a rebirth of sorts into a growing small town that is attracting new families while increasingly serving as a bedroom community for people who work in Sioux Falls or Mitchell.
The city has seen its population grow from 631 in 2020 to 711 in 2024, a jump of 13% over those five years.
Unlike many other rural communities in South Dakota, Canistota's population skews younger, with 42% of residents age 29 or under, according to the U.S. Census. School enrollment has risen from 293 in 2022 to 308 in 2025.
After moving her family to town eight years ago and engaging in numerous development projects, Killoran said she has done a 180-degree turn on her feelings toward Canistota.
"I look at everything through the lens of being a mom, and in my opinion, it's priceless," Killoran told News Watch during an interview at the Barn and Barrel restaurant in Canistota in June. "I wouldn't trade it for the world."
Insights: New housing creates opportunities
A 2015 study commissioned by the city painted a somewhat glum forecast for housing growth in Canistota.
The study showed that the number of housing units in the city grew by only one in the 20-year period from 1990 to 2010, that 26% of existing homes needed major repairs and 10% were dilapidated.
At that time, the study cautioned Canistota leaders not to expect significant housing growth, even though land and homebuilding costs were considered affordable.
Even with a strong education system, quality infrastructure and a solid commercial base, the study indicated that a "value gap" existed in which existing homes were priced so low that it made it infeasible for housing developments to offer a suitable profit margin for builders or be affordable for buyers.
The recent surge of available housing in Canistota should create opportunities for new growth in the city, said Ryan Ortman, a doctor at the Ortman clinic who was born, raised and still lives in the city.
“If you’re staying stagnant, you’re probably in trouble in a small town, so this new housing should be another boom for us,” Ortman said. “The No. 1 goal is to bring in new families to make this their home and find employment in town or close to it.”
Ortman, 54, said his father, Tom, and a partner embarked on their own effort to create new housing two decades ago with the development of the Evergreen Meadows Subdivision that brought 18 houses to former farmland on the city’s east side. Many of those houses have been built in the past few years.
“That really is the heartbeat of a small community in that you’ve got to have the young couples moving back and raising families and supporting the town and the schools,” he said.
Ortman said the clinic, first launched in 1915, will benefit from population growth in the city but not extensively since it draws patients from across the country.
The clinic has developed a strong reputation for quality care and honest dealings that has drawn 3 million patients over its history, including a significant and consistent number of Amish clients from several U.S. states, Ortman said.
In many respects, Canistota is perfectly situated to provide a quiet and safe rural lifestyle while remaining within easy driving distance of more urban areas.
The McCook County city is located about 5 miles south of Interstate 90 off Exit 368. While some residents commute the roughly 40 miles to either Sioux Falls or Mitchell for work, Canistota has its own employment base anchored by the Ortman clinic, Engbarth Directional Drilling, agricultural suppliers, health care providers and local government and schools.
The city has a wide range of amenities for a population of roughly 700, including a grocery store, a bank, a Sanford Health clinic, a Good Samaritan nursing home, four hotels, two restaurants and two churches. The school was renovated a few years ago and the city has a modern sports complex and municipal pool.
"There's no other small town in this area that has all these amenities," Killoran said.
Evidence: Turning a corner on housing
Mike Kerrigan, owner of Gray Duck Builders, is making a significant contribution to the present and future of his adopted hometown.
A native of Minnesota, Kerrigan lives south of Canistota with his wife, Morgan, and their nine children. Morgan grew up in Canistota and runs the Dakota Prairie Inn and Suites hotel in town.
Mike Kerrigan, meanwhile, has invested significant time and money in developing new and rehabbed housing in Canistota. He has purchased roughly eight dilapidated homes and fixed them up for resale and, so far, that business effort has paid dividends for Gray Duck and for the community itself.
“You’re changing a property that was falling apart into something that is in pristine condition,” he said.
Kerrigan is also building a 16-unit subdivision on the south side of town to meet what he hopes will continue to be a strong market for people moving to Canistota. To help finance the project and speed up construction, the city approved a $1 million tax increment financing district for the Gray Duck Subdivision, Kerrigan said.
One completed house has sold, another is on the market and a third home is nearly complete, he said.
One home has two bedrooms and two bathrooms, while the other is a four-bedroom, four-bath with 2,500 square feet of space and a finished basement. The list price for homes in the subdivision will be in the range of $425,000, which is a far lower price than for a similar new construction home in the Sioux Falls market, Kerrigan said.
“Canistota is only going to grow more as the cities of Sioux Falls and Mitchell continue to do so,” Kerrigan said. “We’ve never really had a hard time selling a home in town because they go fairly quickly.”
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The growth is largely by a desire by young couples and families to return to a rural lifestyle, Kerrigan said. His last two home sales have been to couples in their 20s who grew up in rural America, went to college in cities and are now wanting to start a family in a safe, small town with good schools.
“They can afford to live here and everything meets their criteria,” he said.
Kerrigan also targets retired couples or individuals by building his new homes with zero-entry systems, which allow entrance without stairs.
“There’s some older people who may want to get out of the hustle and bustle of Sioux Falls and live in a little calmer area,” he said.
Limitations: Partnerships often required
The path to building new homes in rural communities is often full of potential pitfalls – from acquiring land to obtaining funding to finding a builder and materials.
In many cases, those hurdles prevent projects from launching, according to Mike Knutson, a coordinator with Dakota Resources, a nonprofit community development agency.
"Being a small-scale developer in a rural community can be daunting," Knutson wrote to News Watch in an email. "In many communities, no one is willing to take that risk."
In 2025, Dakota Resources held a conference where it highlighted the efforts of Killoran, who is a member of the Canistota Development Corp.
In an approach proven successful in many isolated small towns, Killoran obtained funding and support from outside agencies during previous housing projects, including the South Dakota Housing Development Authority and Homes Are Possible Inc.
"In small communities, a developer’s support network can be limited," Knutson said.
Kerrigan said he will be the builder on a set of new duplexes being developed by Killoran, whom he considers a partner in housing projects and also a close friend.
“We’re both very bullish on Canistota, and we’re sticking with it,” he said.
Bart Pfankuch
South Dakota News Watch is an independent nonprofit. Read, subscribe for free and donate at sdnewswatch.org. Contact content director Bart Pfankuch: 605-937-9398/bart.pfankuch@sdnewswatch.org.
