I agree with you about the possibility for folks "hanging out", but I think that can be solved in other ways.

Providing free toilets helps to eliminate messes in the streets, as I noted in my post, "Compared to Europe, 25 cents is a bargain". There's nothing quite like seeing a bum make a mess in the middle of the sidewalk, as I saw while in Rome. It was right next to the metro station near our hotel. And the mess stayed there until it rained - no street sweepers or sidewalk caretakers there.