Many homeless already have problems with banks, the criminal justice, healthcare system and other institutions. This is just going to add an extra institutional problem keeping them trapped in homelessness.
Right now, we operate under the ridiculous presumption that members of the (b) group are capable of acting rationally and in their own best interests. This is objectively false, but since this is the presumption we are forced to pretend is true, we can't force them to into treatment, however bad they may need it, unless they are at risk of inflicting imminent physical harm to themselves or others (but in this context, physical harm doesn't mean any harm typically arising from drug use...)
The proposal lets us force the members of the (b) group into treatment/rehab, however much they may refuse. And this is important, because people who are mentally ill will refuse treatment, until they get treated, at which point they recognize why they need to be treated, and will generally choose* to remain under treatment and to accept housing.
We should take care not to assume that everyone in the "permanently homeless" category is there because of some sort of mental illness or drug addiction, forcing them into unwanted and unnecessary "treatment" until they agree to conform. Not wanting to be housed is not, in itself, a mental illness.
IMHO the only thing that could potentially justify forcing someone to accept treatment (or confinement—their choice) would be if they are manifestly a danger to others. In other words, the current situation without this proposal, except no use of force is justified against those considered a danger only to themselves and not others.
I am a 'live and let live' person and generally not bothered by the sight of homeless people (besides sympathy for their plight), but it has all started to get out of hand in California.