1. A municipality upon the recommendation of its governing body may submit an application for state assistance toward the cost of any project which is eligible for state assistance pursuant to this article to the commissioner in such form and containing such information as he may require.

2. The commissioner shall review such project application and may approve, disapprove or recommend modifications thereto consistent with applicable law, criteria, standards or rules and regulations relative to such projects.

3. Upon approval of a project application, a municipality may enter into a contract as further provided within this article with the commissioner for payment of state assistance to be received pursuant to this article.