(2) Any relocated section of an existing highway and such portions of existing highways, which at the time they are designated as throughways have less than 10 commercial businesses abutting thereon catering to the motoring public in any one mile of such existing highway, may be designated and constructed as or converted into a throughway by the department. As used in this subsection, "relocated" means a highway or section thereof so located that for its construction an entirely new right of way is necessary.
(3) The authority and power of the department extends to and includes state highways within the corporate limits of cities, and with the approval of the municipal authorities may extend to and include city streets.