Creates the defense community compatibility account.

Authorizes the department of commerce to expend money from the account to provide state matching funds for projects identified by local governments to address incompatible development near military installations.

Requires the department of commerce to: (1) Evaluate and rank applications using objective criteria;

(2) Consider the degree to which project is compatible with the criteria established in the United States department of defense's readiness and environmental protection integration program;

(3) Produce a biennial report identifying a list of projects to address incompatible developments near military installations; and

(4) Consult with the commanders of United States military installations in the state to identify eligible projects.