I do feel for the homeless, and of course its a refuge etc, but its a public service and so can be removed from the tram/service.
Its not a difficult solution to have to just grab a free ticket which could take you to the end of the line. In which case, no ticket (even free) no pass.
I have a high opinion of Seattle in my mind, not that I've been, but to not think of ways around the problem and just throw it in the bin.. I dare say, it might not have been just the homeless problem.
> not to collect fares from anyone that declines to pay
How is that possible by the way ? Get on without paying ? Why would any driver do that anyway ?
-- Edit 2 -> I am coming from a EU & ASIA experience only