1. Counties and other political subdivisions of the state, except incorporated cities and towns, shall be reimbursed for money expended by them in the construction or acquisition of roads and bridges now or hereafter taken over by the state as permanent parts of the system of state highways to the extent of the value to the state of such roads and bridges at the time taken over, due consideration being given to the type of road the state would have constructed had such road not already been constructed, but not exceeding in any case the amount expended by such counties and subdivisions in the construction or acquisition of such roads and bridges, except that the state highways and transportation commission may, in its discretion, repay, or agree to repay, any cash advanced by a county or subdivision to expedite state road construction or improvement.

2. Any portion or all of such reimbursements shall be made either in the form of additional roads or in cash at the election of the authorities of the county or political subdivision to which reimbursement may be due. If said authorities elect to have any reimbursement made in the form of additional roads, such roads shall be constructed in such county or political subdivision under the supervision and direction of the commission and shall connect with the system of state highways; or, all or part of said sum may be used to construct a state highway of a higher type than that proposed by the commission. Any reimbursement which the authorities of a county or political subdivision elect to have made in cash may be used for the purchase of rights-of-way for state highways within such county or political subdivision.

3. When the commission takes over a road, to the construction of which more than one county or political subdivision has contributed, any reimbursement shall be divided among said counties or subdivisions in the same proportion as such counties or subdivisions contributed to said construction.