The focus of this study is on the relationship between community support programs and the provision of mental health services to urban Hispanic populations, and the impact of existing public policies and future policy options on the chronically mentally ill in Puerto Rican neighborhoods in New York City. This policy analysis uses five steps. (1) The problem is reviewed and analyzed in light of available knowledge; major issues discussed are the underutilization of mental health services by Hispanics, deinstitutionalization and the development of community health centers, and the nature of community support systems. (2) Existing policies at the Federal, New York State, and New York City levels are reviewed, as are relevant judicial decisions. (3) Three public policy options--a managerial fiscal model, a community development model, and an ethnic model--are examined in terms of administrative control of programs, source of funding, nature of services delivered, forms of support, and program specificity. (4) The most promising policy options for improving mental health services in Hispanic neighborhoods (the ethnic and community development models) are discussed in terms of economic costs, values represented, public acceptability, political feasibility, ease of implementation, and unintended consequences. (5) A strategy for the implementation and evaluation of the preferred solution is considered. (CMG)