Neither will work for different reasons but also for the same reasons. The Wapato is built to be a prison. It looks like a prison and it is unsuitable to put anyone there other than prisoners. It is also out of the way and the homeless are being pushed out of site and away from their home place.
The land at Terminal 1 is a no man's land. Nothing is out there and it is away from services. It is just another way to get the homeless out of sight of "polite society"