The trend in public housing, and its been going this way for a long time in larger cities, is decentralization. Basically the theory, which I believe is correct, is that when you put a lot of people on public assistance in a small, defined area you are setting them up for failure. You want to disperse the group throughout the city so those families see more than just other project residents everyday. It also decreases the congregation which leads to street violence and crime (like at the infamous 7-11 on Hal Greer).
That's what they are trying to accomplish. They are going to rebuild some housing there, but lower density, and dispersing the remaining residents.