I think this embedded structure approach is amazing. It's really the best way to ensure the bungalows become permanent fixtures for the next 30+ years, short of Historic Landmark designation. Interestingly, the neighborhood was added to the National Register of Historic Places in 1985, yet none of the buildings are designated as historic landmarks by the city.
Even still, the HLC must must give permission for an individual structure's demolition, but it doesn't seem that permission is needed for modification.
Side note: here is a good photo of the Citygroup Center:
https://www.flickr.com/photos/schizoform/25910655104