York City might have lost its bid for a City Revitalization Improvement Zone -- and potentially millions of dollars in economic development -- because of a technicality.

State officials contend that York failed in its application to designate an authority that met the legal requirements necessary to oversee a CRIZ, a new program designed to incentivize urban development by diverting tax dollars back to project costs.

Five cities, including York, competed for the state's blessing to create one of two available zones.

But state officials ultimately disqualified York and Erie from consideration, said Steve Kratz, a spokesman with the state Department of Community and Economic Development.

Both cities designated existing authorities to implement the CRIZ program but failed to amend the articles of incorporation to include those powers, Kratz said.

Kratz said the disqualifications were based on the legal opinion of DCED counsel.

"Guidelines and legislation are developed to be followed," Kratz said. "In this case, it's unfortunate that they had to be disqualified."

That left just Reading, Lancaster and Bethlehem for consideration. The CRIZ slots went to the latter two.

Saylor disagrees: A York County lawmaker said Thursday that he disagrees with the state's decision.

"York was definitely one of the top two," said House Majority Whip Rep. Stan Saylor, a Republican from Windsor Township who worked closely with city officials to craft York's application.

Saylor said he's basing that opinion on "insider information."

The York Dispatch submitted a Right to Know request Dec. 6 to the state for copies of all cities' CRIZ applications. On Dec. 13, the state invoked a 30-day extension to fulfill the request, giving the state until Jan. 12 to respond.

In early December, York officials released the city's application in response to a Right to Know request from The York Dispatch.

Saylor said the state's decision to disqualify York was "absolutely wrong." Saylor said he believes there are attorneys who would have reached the opposite conclusion.

"We'll continue our battle to get York designated as a CRIZ," Saylor said. "I disagree with their reasoning. I made it very clear to the governor's people."

Three-agency committee: A committee of representatives from the DCED, the state Department of Revenue and the Office of the Budget reviewed the applications.

All five applications were thoroughly reviewed before the legal opinions disqualified York and Erie, Kratz said. He said he's not sure where York ranked before the city was disqualified.

The state Legislature in July approved Act 52, which created the CRIZ program. The legislation indicates the need for cities to establish a "contracting authority."

However, it wasn't until Oct. 31 that the state issued guidelines for the application process and set a Nov. 30 deadline, giving eligible cities one month to submit a competitive application complete with a proposed CRIZ map of up to 130 non-contiguous acres and potential development projects. Cities also needed to create a CRIZ authority before the deadline.

At least two eligible cities -- Altoona and Wilkes-Barre -- did not submit applications.

York scrambled at the last minute to comply with the CRIZ legislation.

The York City Council voted to create an authority and appointed seven people to the authority less than a week before applications were due.

The authority's articles of incorporation were filed that week, said Shilvosky Buffaloe, the city's acting director of economic and community development.

Thanksgiving, plan B: "Due to (Thanksgiving), however, the new authority's documentation from the Department of State was not returned in a timely manner" to obtain a required federal tax-identification number from the Internal Revenue Service, Buffaloe said in an email.

Looking for a solution, the city tapped its General Authority -- which owns the city's parking garages and meters -- as its official applicant.

According to the state's guidelines, that was a viable option, provided the city include "an opinion of legal counsel" explaining why an existing authority qualifies.

Buffaloe said the city did that.

But, according to a letter from the state Department of Community and Economic Development sent to a city official Monday, state officials dismissed York's application for a CRIZ "because the City of York General Authority did not qualify as a contracting authority, as required by statute."

Same-day announcement: That same day, Gov. Tom Corbett's office announced the state had chosen Lancaster and Bethlehem.

Several York officials have said they are looking forward to submitting an application for a second round of CRIZ designations in 2016.

"Certainly there was an aggressive turnaround," Kratz said. "But, remember, there is opportunity in the future to award two in 2016 and each year after that. At the end of the day, strong applications moving forward will be awarded CRIZ designations. We don't view this as a once-and-done program."

-- Reach Erin James at ejames@yorkdispatch.com.