The Pennsylvania Supreme Court issued a ruling Friday that should sound the death knell for a midstate city’s 3-year-old Business Improvement District.

That decision will ring out in downtown Lebanon, which has a 15-block business improvement district -BID, for short – centered on Cumberland Street.

In essence, the court found in an opinion by Chief Justice Thomas G. Saylor that the city shouldn’t have created the district because a sufficient number of property owners within it voted against its founding in 2015.

Since the district’s creation, the city has collected hundreds of thousands of dollars from property owners within the district to pay for programs and upgrades, such as lighting and safety improvements, money that might have to be paid back.

The Supreme Court decision marks a victory for Edward J. Schock, an attorney with an office in Lebanon’s downtown who had been battling the district in court for years. He took the case to the state’s highest court after a Commonwealth Court panel in 2017 backed the district’s formation.

In siding with Schock, Saylor found the state legislation creating business improvement districts – which are cousins to neighborhood improvement districts – is convoluted and confusing, particularly regarding who is eligible to vote on whether a BID should be founded.

City officials argued that the owners of all 358 property owners within the district were eligible to vote on its establishment. Schock, however, contended that only the 280 property owners who had to pay financial assessments to finance projects in the district should have been entitled to vote. Exemptions on paying those assessments were given to 78 properties used for religious, educational and nonprofit health care purposes, the type of holdings that normally are exempt from property taxes.

The owners of non-exempt properties were required to pay at least $250 a year apiece to support the BID programs and the salary of a manager to run the program.

The assessed and exempt distinction was important in the dispute, since city officials based their decision to form the district after concluding that fewer than 40 percent of property owners who would “benefit” from the BID programs had opposed its founding. By state law, a district cannot be created if at least 40 percent of those whose properties would fall within it object. The law also states that any property owner who doesn’t cast a vote should be considered voting in favor of the BID.

As Saylor noted, 132 property owners objected to creation of the BID. By the city’s calculation, that amounted to less than 40 percent of the total properties within the district. By Schock’s tally, however, more than 40 percent of the owners of properties that would pay assessments for the BID objected to its creation.

Saylor’s court accepted Schock’s math. The state law allowing the creation of BIDs specifies that only property owners who would have to pay financial assessments to support such districts are eligible to vote on whether they should be founded, Saylor concluded.

He rejected claims by city officials that restricting voting rights to only assessed property owners is “unreasonable.”

“Excluding exempt property owners from voting on the establishment of a neighborhood improvement district is not absurd, unreasonable or incapable of execution since that is precisely what the General Assembly has provided in the City of Philadelphia,” Saylor wrote.