1. The commissioner, in the name of the state, may enter into contracts with municipalities, counties or the city of New York to undertake rail preservation projects, or local street or highway projects, and any such municipality, county or the city of New York may enter into a contract with the commissioner. Any such contract may include such provisions as may be agreed upon by the parties thereto, and shall include, in substance, the following provisions: a. an estimate of the reasonable cost of the project as determined by the commissioner; b. an agreement by the commissioner to pay to the municipality, county or the city of New York during the progress of construction or following completion of construction as may be agreed upon by the parties, an amount, not to exceed the total cost of the project or such lesser amount as may have been established pursuant to section two hundred thirty-five; c. an agreement by the municipality, county or city of New York;

1. (i) to proceed expeditiously with, and complete, the project as approved by the commissioner,
2. (ii) to apply for or make reasonable efforts to secure federal assistance, if any, for the project,
3. (iii) to secure the approval of the commissioner before applying for such federal assistance, in order to maximize the amounts of such assistance received or to be received for all projects in New York state,
4. (iv) to provide for the municipality's, county's or city of New York's share of the cost of the project, if any; d. A provision that, in the event that federal assistance which was not included in the calculation of the state payment becomes available to the municipality, county or city of New York the amount of the state payment shall be recalculated with the inclusion of such federal assistance and the municipality, county or city of New York shall pay to the state the amount by which the state payment actually made exceeds the state payment determined by the recalculation. e. In connection with each contract, the commissioner shall keep adequate records of the amount of the payment by the state and of the amount of federal assistance, if any, received by the municipality, county or city of New York. Such records shall be retained by the commissioner and shall establish the basis for recalculations of the state payment as required herein.