It was just such a scenario that helped ruin Asbury Park, NJ. In the late 60's, they closed the local mental hospital, and a lot of them were section 8'd into housing or just plain let out. They turned a seaside mecca into a Carnival of Souls -type empty shell.
Before:
After:
Obviously it's more than just the psychos - it was the druggies and the nearby downtown "civil unrest" of the 60's, let's just say. It's kind of like the pics you see of downtown Detroit.