It is definitely a downward spiral sort of situation. The gravitation of such people to the few remaining areas that are still "20-minute neighborhoods" or something close to it, increases the pressure on them such that people move out (to neighborhoods which are suburban or at any rate less central).

It also causes businesses (especially small ones which cannot afford private security) to move away, which erodes one of the objectives of this approach, which is to have small businesses of many sorts in the neighborhood. People may, in the abstract, like the fact that the business is tolerant of the poor and mentally ill, but they don't want to walk past them to go to that business. Definitely it's a bad, self-reinforcing situation.