Here's the Times article on the subject.
On one hand, its a slap in the face to those who had planned to develop the houses, because it was a good plan. However, it was a costly plan for the county, and they have valid points about the jail being landlocked. I suspect that the block will be paved soon after demolition, so it can be used for parking during the Police Station/Jail renovations.
I would have understood if the County had gone either way with this decision. Hopefully the group with the propsal can find another block for their project.