Except as basic needs are provided pursuant to a life care agreement governed by Chapter 10 (commencing with Section 1770) of Division 2 of the Health and Safety Code, to the extent permitted by federal law the director shall formulate and promulgate regulations which establish criteria for evaluation of allowances provided to recipients of public assistance under the following circumstances:

1. Applicants or recipients who reside in a facility operated by an organization that provides for any or all of the basic needs of the individual.

2. Applicants or recipients who reside under a living arrangement paid for and controlled by an organization.