According to the article, the Red Crescent and the British Department of Development were building apartments for Palestinian refugees in the camp--apartments of exceptional quality. However, the British builder who were hired have been threatened with violence by the refugees: they were scared off after their offices were shot at.
There are two possible reasons given for the reaction of the Palestinians. The perceived underlying cause is conflict over the specifics of the construction itself. There are allegations that some families would expand their living space at the expense of others, that some would be forced to move and others not. These tensions are typical of construction, although they only seldom become violent.
The other possible cause, given by the Palestinians themselves, is that they fear that the construction would undermined various claims that they hold to the land:
many of the camp's 14,000 inhabitants were also suspicious that the reconstruction work and attempts to move them to less crowded areas would undermine their status as refugees and weaken the camp's ability to defend itself against any future IDF raids.
I can see the logic of their argument. Settlement has been used in the past to undermine other claims that ethnic groups have to land. And the conditions in which Palestinians live elicits sympathy and aid from all over the world.
However, (don't be snarky, don't be snarky) the construction work is the result of the sympathy and aid that they seek. Furthermore, it would be more difficult for the refugees to be moved if they were well settled in the area (and justify their dislocation). It is the opportunity for Palestinians to build their nation beyond ethnicity, to create its infrastructure, to create communities.