_What if they want to sleep on the street?_
Let's start by sheltering as many people as we can, and when our problem becomes "too many empty beds", then we can move on to that problem.
_Where do we build them?_ I bet there are choices we can make that house 100+ people for every 1 person who is mildly inconvenienced.
_Are there barriers to living in these dorms?_ No.