An issue with places like this, for the city, community, or organization that builds and administers it, is liability. Security, as an example, is incredibly difficult. Esp. if you have families. Even if you segregate men, women, and families, all are vulnerable to theft, rape, violence in these concentrated areas of unscreened people. Even if they are screened, the range of drug abuse, mental illness, criminal history, authoritative resentment, etc is HUGE.
They could also be held responsible for crimes and property damage (yes, I know, also a crime) in the immediate vicinity of the shelter property.
For a city to cover its ass, the security and rules would have to be very strict (as some shelters do have)...and that's costly and then begins to cross the line between freedom (legal and personal) and what so many of these disenfranchised people distrust and wont accept.