Low Income Housing on Expensive Real Estate

While doing research in one of my submarkets, I found out that a developer is seeking a zoning variance in order to put low income housing in an area where the average real estate price is $2,279,097 per acre.  Condos and Single family homes in this area sell from a range of $200,000 to $1.5 million.  I attended the NPU meeting for this Zone; however the discussion was tabled for the next meeting.  I'm concerned for the members of this community that the addition of low income housing will further depress home values in the next 10 years, and possibly longer.  The home values in the area have already had a sharp decline due to the sub prime mortgage fiasco.
I am assuming that the developer who is going to build this tract of 600 multi family homes will receive quite a big check from the city, and this seems to be their motivating factor.  I feel that this would severely undercut home owners in the area.  According to the census bureau the addition of low income housing in populated urban areas because crime rates to rise.  I am not against low income housing by any means, because everyone needs a place to live.  However, I can't seem to grasp why low income housing would be built on real estate that is so expensive and that building it would make the citizens who live in that area suffer by basically taking equity of their homes. 
How would you advise a client who is looking to buy or sell in an area as such?  For example, if someone bought a condo for $234,700 three years ago and comps are now coming in at $210,000 to $225,000, should they sell their home or disregard the "on the ground intelligence" that has been discovered.  The sellers would essentially have to come to the closing table with a large amount just to payoff the mortgage and get out of this particular submarket.
I look forward to hearing from my peers (you), to see what you would do in a situation such as this.