A study was conducted for the Michigan State Housing Development Authority to gather background data necessary to initiate prototype community housing for mentally and physically handicapped independent adults. In an extensive survey and analysis of the literature and existing facilities, the problem of mental retardation, including legislation supporting construction of residences for the retarded, attitudes toward residential care, and types of residential facilities, was covered first. Second, the problem of the physically handicapped was reviewed, including architectural and transportation barriers, residential and supporting service needs, and a brief description of some housing programs. Status of residential programs for the mentally ill was also studied. Need for community housing was defined and documented, criteria describing the target population identified, pertinent socio-economic and geographic factors analyzed, similar programs and facilities identified and evaluated, and fundamentals involved in designing a housing project and services described. It was concluded that support for such programs exists among parents, the handicapped, and citizens, but that existing programs are often isolated and inadequate. Twenty-four recommendations concerning public housing for the adult handicapped are made. (KW)