A lot of tortured troll logic went into it. Having done some research earlier, the city claimed that if they have homes, the homeless may engage in prostitution, drug dealing, or other illegal activity in them. So apparently the homeless have to stay in tents instead.
Escalating their battle to stamp out an unprecedented spread of street encampments, city officials have begun seizing tiny houses from homeless people in South Los Angeles.
www.latimes.com
The designer of the project suspects otherwise, and points out that when he's building these tiny homes for 1200, it's harder for the city to ask for 2 billion for a new initiative for the homeless that won't do anything.
A Los Angeles man took his city's homeless problem into his own hands by building dozens of tiny houses and donating them to people living on the street.
mashable.com
To be fair, it looks like the guy was leaving the tiny homes under bridges and such and I can see why those would be in the way and irritate people. There have been similar projects that have been more successful in other towns, generally by getting permission from the city first and using private land to build shelter parks.