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Well, two things.

First, I'm challenging the statement:

> Drug-addicted and mentally ill people do not know how to keep even a moderately organized living space.

Which is nonsense and a damaging stereotype. Drug addicts and mentally ill people exist in all areas of life and many are successful - more so than you or I.

Secondly, I'm challenging you on:

> The theory is the crazy people on the street will suddenly be not-crazy when they get an apartment

Because in fact there is now a great body of evidence that shows that housing-first, that is providing housing with no pre-conditions, is in fact extremely effectively at treating both uncontrolled addiction and untreated mental illness.