The department may maintain any street or highway which is not a part of the state highway system whenever all of the following facts exist:

1. (a) The department has performed upon such street or highway a construction or improvement project.
2. (b) Such project was financed, in whole or in part, by moneys contributed by the government of the United States.
3. (c) Either the governmental agency having jurisdiction over such street or highway, or in the case of annexed areas, the county prior to such annexation, has agreed either with the State of California, acting by and through the department, or with the United States to maintain such street or highway to the satisfaction of the authorized agents of the United States.

4. (d) The governmental agency having jurisdiction over such street or highway has failed to so maintain such street or highway, and the authorized agents of the United States have demanded of the department that such street or highway be maintained in accordance with such agreement.

   The department shall carefully segregate all items of cost of such maintenance, including not to exceed 10 percent for overhead and administration. In the event the governmental agency having jurisdiction over such street or highway is a county or city, the director shall notify the State Controller of the expenditures by the department on such street or highway. The State Controller thereupon shall deduct from the succeeding apportionments to such county or city from the Highway Users Tax Account in the Transportation Tax Fund the amount certified by the director and shall place such amount in the State Highway Account.