If disputes arise when negotiating compulsory fire protection contracts, they shall be disposed of as follows:

(1) When notified by one of the parties of a disagreement, the director shall mediate a resolution.

(2) If the impasse continues, the director shall recommend a resolution. Mediation efforts shall be completed within thirty days after the director is notified.

(3) If the recommended resolution is not accepted, the director shall direct the parties to arbitration. Arbitration shall be conducted by a neutral arbiter acceptable to each party to the negotiations, and shall be completed within sixty days after being initiated. The arbiter shall select the final offer of either of the contracting parties, or the director's recommended resolution. Expenses associated with the arbitration shall be borne by the contracting parties, and the arbiter's decision shall be final, binding, and nonappealable.