For the 1.2 billion dollars they are spending, if all of the apartments were built to the spec of a roadside motel room (~350 sq ft - or more than double the average SRO), they should realistically be able to build over 10,000 units for that kind of money (that's including California's exorbitant cost per square foot).
It would be like if the government banned motorcycles, and then said "okay, instead we'll make you a nice, compact crossover", and then handed over design and construction of the crossovers to a company that builds snowplows.
What's frustrating is that SROs used to be provided by the private market, largely free to taxpayers! How much better a use of government money it would have been to just improve the situation in SROs than to quietly let them shutter and hope the poverty they represented just disappeared with them.