Bridget Gracey had been trying for years to sell a small corner lot on Williston Road in South Burlington where her grandparents once lived, across the street from businesses started by her family: Gracey's Store & Deli and Gracey's Liquor Outlet. This summer, a buyer finally stepped forward. A housing developer from Winooski agreed to purchase the long-vacant half-acre parcel for $430,000, with plans to build up to 32 units of housing. Her hopes for a quick payout were dashed, however, when the project ran into two hurdles. The first was a decades-old deed restriction preventing most kinds of businesses from operating on the site. The second was the owner of an adjacent office building, Hinsdale Properties, who wanted something in exchange for lifting the restriction— $500,000. The demand blindsided Gracey, who has been a real estate agent for decades and had never run into anything like it. "South Burlington needs new housing, and these guys want to build it," said Pete Bissonnette, Gracey's fiancé and a partner in the potential deal. "To be held hostage and not be able to put up what you want there is asinine." The demand was made by Jacob Hinsdale, property manager for Hinsdale Properties, the company his father, Clark, founded in the 1950s. It controls one of the largest real estate empires in the area. Jacob is married to state Sen. Kesha Ram Hinsdale (D/P-Chittenden-Southeast), who's been an advocate for removing barriers that prevent new housing. Earlier this year, the Vermont Senate Ethics Committee dismissed a complaint from several citizens that alleged a conflict of interest between the family business she married into and her duties leading a legislative housing committee — a complaint that Ram Hinsdale said at the time was "completely baseless." Reached on Monday, she declined to comment. Vermont has a long history of restrictive zoning practices that limit multifamily housing, often with the justification of preserving the character of a community. It's something land-use planners, economic development officials and politicians largely agree has contributed to the state's housing crunch. But even in places such as South Burlington, which has welcomed high-density residential projects in its new downtown, historic opposition to development can remain deeply rooted in land records and be harder to sweep aside. Decades-old deed restrictions, known as covenants, are just one example. "It's a dispute that rears its head long after the people who made…