MUKILTEO — A state appellate court has denied a legal challenge from the city of Mukilteo and a community group that sought to void a contract between Snohomish County and a company hoping to build an air passenger terminal at Paine Field.

The state Court of Appeals Division I handed down the ruling Monday.

The court’s order for summary judgment found no reason to undo an option-to-lease agreement that the county approved with New York City-based Propeller Airports.

“We hold that there are no genuine issues of material fact for trial,” reads the second sentence in the opinion from three appellate judges.

The County Council in 2015 voted 3-2 to approve the lease option. Mukilteo and the Save Our Communities neighborhood group soon asked the courts for review.

The county contract gave Propeller three years to design and secure permits for a two-gate terminal. If the project moves ahead, that could lead to a 30-year lease with two optional 10-year extensions.

County permitting employees are reviewing plans for the proposed 29,300-square-foot building between the airport control tower and the existing airport terminal. The company recently turned in updated noise and traffic studies needed for approval.

Propeller CEO Brett Smith issued a statement that called the court decision a “win for local residents.”

“As we prepare to start construction at Paine Field, we’re pleased that yet again, attempts by Mukilteo to prevent Snohomish County from realizing commercial air service have been denied,” Smith said. “This decision is significant because the opposition claims were shown to be so baseless that they didn’t even deserve a hearing. Limited commercial air service will bring more jobs and economic activity to Snohomish County, including residents of Mukilteo — not to mention better travel options and competitive fares.”

Jason Cummings, Snohomish County’s chief civil deputy prosecutor, said the county was “pleased with the results, but this is just one step in a long process.”

Mukilteo Mayor Jennifer Gregerson said Monday that it was too soon to know what further actions the city might take. “We’ll be discussing it,” she said.

If the city were to pursue an appeal, it would have to be done within weeks, she said.

“For me what’s most important is we’ve continued to defend the quality of life for our residents and Mukilteo and pursue the best use of the airport, which is aerospace manufacturing and support for that industry,” Gregerson said.

The city first began setting aside money in its annual budget in 2007 to oppose the start up of commercial flights at Paine Field, she said.

The city has budgeted $100,000 annually for the past several years.

“We haven’t always spent all that money — that’s what we’ve set aside,” Gregerson said.

The city has been reviewing documents from Propeller on its proposed passenger terminal and has provided comments to the county about those plans.

“We’ll continue to do that,” Gregerson said.

The fight over allowing regular commercial air service at Paine Field has dragged on for decades.

A key turning point came in 2012, when the the Federal Aviation Administration concluded that about two dozen daily takeoffs and landings by passenger jets would have no significant impact on surrounding communities. An appeal by Mukilteo and Save Our Communities was rejected by the Ninth U.S. Circuit Court of Appeals last year.

Noah Haglund: 425-339-3465, nhaglund@heraldnet.com. Twitter: @NWhaglund.