He's probably worried about lithium-ion batteries in the buses exploding or burning, as has happened with Teslas (when seriously damaged). While I won't say it can't happen (it certainly can, especially if something goes wrong with the charging system or if a bus is hauled in after an incident that damages the battery), it should be unlikely in normal use.

Isn't Potrero a trolley bus yard now? If so, note that most of the current-model trolley buses also have a traction (high-voltage) battery for short-range off-wire running. So even if it were to stay trolley-bus-only with housing on top, the potential for a battery incident would exist. Just smaller than one with the larger-capacity batteries used in battery-only buses.

Note, too, that the diesel-hybrid buses have a battery that's large enough for short-distance electric-only operations. So covering a bus yard serving the hybrid fleet would have the same potential issue.

Finally, it's an engineering/architectural issue really. As with housing over commercial space (common enough in SF), it's necessary to have a fire block between the different uses. If designed and built properly, I see no reason why housing could not be constructed over a bus yard especially if the buses are entirely or mostly electric. It'll be expensive, but what isn't in SF?