(a) The department will receive proposals from local agencies, either city or county, for the construction of a connector. Proposals shall contain an agreement on the part of the local agency to participate in the amount of fifty percent (50%) of the cost of the project, and to maintain the connectors at its own expense after completion of the project. The department shall receive the proposals on the basis of coordinated development of access to the various sections of interstate highway routes or fully controlled access highways as they become open to traffic, and in accordance with established departmental criteria for priority of construction and in accordance with the availability of funds.

(b) In no event shall the engineering phase of a connector project be begun by the department until the entire cost of the engineering, as estimated by the department, is deposited with the department by the local agency.

(c) After the engineering phase of the project has been completed, the right-of-way phase of the project shall not be begun by the department until fifty percent (50%) of the cost of the right-of-way phase of the project, as estimated by the department, is deposited with the department by the local agency.

(d)

(1) After the right-of-way phase of the project has been completed, the construction phase of the project shall not be begun by the department until fifty percent (50%) of the remaining cost of the project, as estimated by the department, is deposited with the department by the local agency.

(2) In arriving at the amount mentioned in subdivision (d)(1), the local agency shall receive a credit of fifty percent (50%) of the amount deposited by the local agency for the engineering phase.

(e) In the event the local agency does not deposit with the department fifty percent (50%) of the cost of the right-of-way phase of the project, as estimated by the department, within sixty (60) days after the completion by the department of the engineering for the project, or should the local agency not deposit with the department fifty percent (50%) of the cost of the construction phase of the project, as estimated by the department, within sixty (60) days after the completion by the department of the right-of-way phase of the project, the department may, at its option, terminate any agreement with the local agency with respect to the local connector, and any funds deposited with the department by the local agency for the engineering phase or the right-of-way phase, or both, shall become part of the general highway fund free from all claims by the local agency.

(f) In the event the local agency does not deposit with the department fifty percent (50%) of the cost of the construction phase of the project as provided for in subsection (d), and the department exercises its option to terminate any agreement with the local agency with respect to the project, the local agency shall pay to the department, upon written demand, the actual amount necessary to reimburse the department for expenditures made in accomplishing the engineering and right-of-way phases after deducting the amounts previously deposited by the local agency as the entire estimated cost of the engineering phase and as fifty percent (50%) of the estimated cost of the right-of-way phase.

(g) In the event of the failure of the local agency to fully comply with this section, the department shall be authorized to receive any funds, excluding rural roads and federal-aid secondary roads funds, that would otherwise be payable to the local agency for highway purposes from the state, until the department has recovered the amount necessary to result in the fifty percent (50%) financial participation in the actual total cost of any phase, or reimbursement in full, as provided for in subsection (a), (c) or (d).

(h) Following the completion of the project, the department shall determine the actual total cost of the project and either pay to or receive from the local agency an amount that results in the equal financial participation by the parties in the total cost of the project.

(i) It is the intent of this part for the local agency to participate in the cost of connector projects with road or street funds of the local agency that shall, in no event, include in any part funds from the rural roads program or the federal-aid secondary roads program.

(j) The maintenance of any road designated as a connector under this part shall be the responsibility of the local agency that participated in the cost of the project.