A. The director may authorize the reimbursement to a city, town or county for the cost of labor, equipment, materials, preliminary engineering and right-of-way purchase required to adjust or relocate a utility facility if all of the following apply:

1. 1. An existing city, town or county public highway or street is established as a state highway.
2. 2. At the time the highway or street is established as a state highway, a utility facility belonging to a city, town or county exists within the right-of-way of the highway or street.
3. 3. It becomes necessary to adjust or relocate the utility facility due to modification or improvement of the state highway.