A new paved walking path is nearing completion along State Road in North Tisbury, but the southern end of the town-funded, $90,000, half-mile trail may not see much foot traffic.

Three of the first four buildings it passes on the eastern side of the road are now closed and for sale, with no immediate plans to reopen.

The Vineyard Foodshop bakery was boarded up last winter, Bittersweet Restaurant shut its doors this month, and Middletown Nursery has been closed and unused for roughly three years.

Meanwhile, only a few more doors down the road, the Yes We Have No Bananas Gallery may have to close its shop because of a zoning enforcement question over compliance with a special permit.

The zoning dispute, and the changing face of the North Tisbury business community, reflects the confused character of that particular stretch of town. It has long been home to a series of small businesses - many of them well-loved by up-Island residents and visitors - but the area is actually zoned as a rural residential neighborhood.

With the passing of time, and the rising cost of land, the dual nature of the neighborhood appears to be coming to a head.

A standing-room-only crowd piled into the town zoning board of appeals meeting on Wednesday night for two public hearings on businesses in the area. The zoning board postponed a decision on the Bananas Gallery and rejected a proposal by Robert Skydell of Chilmark to create a local foods market in the former Middletown Nursery building.

In both instances, zoning board members said that as much as they supported the business ideas, the uses do not appear to be permissible within a residential district. The hearings sparked an open discussion about the larger trends along State Road.

Many residents, both in public testimony and extensive correspondence, said the Bananas Gallery enhanced the North Tisbury neighborhood, and that they would rather see a stable business there than an empty building. Zoning board members noted that their role is strictly to interpret and enforce the zoning bylaws, and that it was up to the town planning board to identify appropriate uses in the area, possibly by exploring zoning changes.

"It's amazing how many people think this is a commercial district," said board of appeals member Roger (Tucker) Hubbell. "On a bigger scale, the planning board, and subsequently the town of West Tisbury, will have to decide what they want to do with this area," he added.

"Over the years, by accretion, we have what amasses to a business district in North Tisbury," said State Road resident Frank Ferro, who purchased his home across the road from Bananas Gallery in 1970. "And there has been no planning - absolutely no planning - about what has gone on."

Town planning board chairman Murray Frank said yesterday that the board will almost certainly discuss the North Tisbury issue at its next meeting, and that a larger dialogue with the general public may come soon after. He said that the planning board itself is divided over what the town should do with that area.

Some members think the town should permit small businesses that pose minimal impacts on neighbors, he said, while others are concerned about the potential for commercial sprawl along the rural section of State Road. The only designated business district in North Tisbury is further down the road, around the Up-Island Cronig's location.

Board of appeals member Anthony Higgins said at the meeting on Wednesday that the fate of North Tisbury must be decided by town voters. Any zoning bylaw change would require two-thirds approval on town meeting floor.

"It has to go to town meeting - otherwise we will get into nothing but these tiny little cases, like we have been doing," Mr. Higgins said. "We have got to clarify North Tisbury. There are so many business there, it's got to be straightened out."

Historically referred to as Middletown, the intersection of State and North Roads was home to one of the earliest European settlements on the Vineyard - predating even the town of Tisbury. According to Gazette archives, Middletown was a business center, with blacksmiths, weavers and cabinetmakers plying their trades. A post office stood near the intersection in the 19th century, in its time a central Vineyard location where horse-drawn mail carriers would stop to rest on their way up-Island.

The village transformed as those Island industries declined, and the area grew increasingly residential. But even when West Tisbury voters adopted town zoning in 1972, and identified the area as a rural residential zone, a number of Middletown businesses were still functioning - earning grandfathered status as pre-existing, nonconforming uses.

Some of the grandfathered uses today include the Tree House Studio gallery (formerly the Red Cat Bookstore) and the MM Stone antiques shop on the western side of the road. Martha's Vineyard Glassworks was permitted as a home business about 14 years ago, because one of the owners lives on the property.

Other historic uses, however, are at risk of disappearing. If a grandfathered use is allowed to lapse for three years, it loses its permitted status.

This summer was the first in more than 50 years that a bakery was not open on the Vineyard Foodshop lot. The landowners in December 2004 forced out family members who are now continuing their popular Humphreys businesses in three down-Island locations, and the entire 10-acre property was put on the open market this summer for more than $4.8 million.

Town zoning inspector Ernest Mendenhall said on Wednesday that he fielded questions from potential buyers who wanted to turn the existing Victorian house on the property into a restaurant, but he explained that such a use would not be allowed within a residential district.

Two doors over, the Bittersweet Restaurant property is also for sale - reportedly for well over $1.5 million. Restaurateur Job Yacubian said yesterday that he may hold private dinners in the building during the fall, but that he has no plans to renew his lease when it runs out this winter. Building co-owner Eleanor Pearlson of Tea Lane Associates this week did not return a call for comment.

Town resident Christopher Morse, who operates the Red Barn Gallery on Old County Road, bought the former Middletown Nursery property one year ago for $700,000. He considered running an art gallery there, but learned that such use was not allowed by zoning. The nursery business operated by John Gadowski was allowed by right in the agricultural district.

Mr. Skydell, the former owner of Offshore Ale in Oak Bluffs, has an option to buy the property from Mr. Morse. Mr. Skydell wanted to turn the existing nursery building into what he called a "rural farm market," selling mostly Island grown produce and food products, but was told by zoning members that such use would only be allowed in the rural district if half of his merchandise was grown or raised on the 1.5-acre property. Mr. Skydell on Wednesday expressed concern with the direction of North Tisbury.

"Like a lot of people, I drive by the former nursery every day and wish someone would do something there so it doesn't continue to look the way it does," he said. "This area has a long history of small-scale commerce and enterprise. I think my business would be uniquely sited to work well there, and I think that it speaks to the needs of the town."

The dispute over Bananas Gallery stems from a 2002 zoning board decision that granted a special permit allowing a gallery or antiques store on the property. Landowner Donald Mills at the time was having difficulty leasing the building for agricultural use, and the board found that because Greene's farmstand historically sold artwork in addition to produce there, that a gallery use would qualify for grandfather status.

But the board received complaints this summer that Bananas had expanded beyond the permitted use by selling clothing, which represents about 40 per cent of the store's merchandise. The zoning board now must determine whether the sale of clothing - described by some as wearable art – is a permissible use within the gallery special permit.

The zoning board continued its hearing until Oct. 18, and requested to meet with the planning board before then to discuss the issue.

Bananas co-owner Judy Hartford told the zoning board that she and her partner will soon have to decide whether to renew their lease, which expires at the end of October.

"If you're going to close us," Ms. Hartford said, "we will have to find another place to go."