The city closed down Whoville because it was a lawsuit waiting to happen. An unsanctioned, uncontrolled camp sounds like a great idea until someone dies of an OD or gets stabbed in a meth-fueled fight while the city turns a blind eye. 

Providing shelter is not a city responsibility. City councilors I've spoken with say voters would like to see it but would not approve either a special levy to fund it or diverting funds from things like the library, public works, or public safety to pay for it.