Modern technology allows for acoustically isolating virtually any kind of housing. (Provided the windows are shut.) Acoustic retrofitting is expensive, but so is losing the tax revenue from a vibrant public space. A better solution would have involved reducing noise levels inside residents’ homes without smothering the plaza.
(Reminds me of a poster I saw at a club, once. Paraphrasing, “Al sees apartment. Al sees club. Al rents apartment. Al spends all his free time making noise complaints. Don’t be Al.”)