Just look at what happened in SF in that warehouse where homeless people died in that fire. There's reason why we have building codes and other housing regulations like fire control and protection. The primary one is safety for those living inside structures and the safety of those near-by. For that reason alone, I support government oversight of housing construction, placement, and maintenance. If the guy wanted to build a little building out in the boonies on land he owned for him to hang out in by himself, that would be different. But when he builds structures for others to utilize, there needs to be approval from government oversight to ensure at least minimal safety of the people occupying the space.
Also, I don't feel that those people have the right to what amounts to squatting on public lands. If the guy also wanted to buy a piece of land to put these sheds on then that would be okay with me. Something similar, although slightly larger structures, was done and paid for by states and FEMA after Hurricane Katrina for temporary housing. They were called Karina Cottages, and even Brad Pitt donated money to build around 100 of them. They're all rotting now, from what I've heard, but they were only meant to be temporary.
Other than that, the government should stay the hell out of it, and let the guy in the OP story do what the government should not be, and obviously isn't, doing... providing temporary housing for the chronically (non-disaster related) homeless.
