A local agency may:

1. Apply to the department and contract with the state Commissioner of Health for state aid pursuant to this title on and after September 1, 1964.

2. Select the person or firm to perform necessary consulting engineering services for a comprehensive study and report and enter into contracts for such services, provided, however, that the state Commissioner of Health shall also be a party to any such contract;

3. Expend money received from the state pursuant to this title only for purposes consistent therewith.