I moved out the year before it was scrapped, but I am not so sure it was because of homeless people. When I lived in Seattle I had literally 0 bad encounters with homeless people on buses. [Definitely nonzero on the sidewalks]

The worst part in my view about the free ride zone was when you would take a bus from downtown to outside the zone. You'd need to pay when you left. Which was hard to enforce, so I think a lot of people walked off. Even if you wanted to play it right, you needed to remember when to pay and when not. I remember hearing from drivers that they didn't care if you pay anyway.

Of course in recent years in towns like Seattle or SF there is always somebody trying to say that the homeless are responsible for the downfall of everything.