I think the best bet would be for the city to work off of the idea of underground housing for the homeless, though not as part of flood tunnels. The idea being that in hot, dry deserts, underground living is a lot better than being on the surface most of the year.
The trick would be marginally improving such dwellings so that they can be “unmanaged”, but still have a simple sewer system, and maybe even have potable water available free of charge.
As long as the homeless agree to set up a “co-op”, so groups can live together as tribes, with an understanding that they need to report a few things, like epidemics and fires, they can for the most part be left alone, as long as the nannies can tolerate their being independent.