Pretty ballsy, to be putting up those signs when you are illegally camping out on city land. I wouldnt' care if someone put up a tent and minded their own business, but this isn't really the case. I'm not sure what they would do to deal with "trespassers"; maybe sabotage the trails again or something? I saw someone who may be the person living there up on the canyon rim above and he didn't seem too friendly/approachable.
Maybe he (or they) will just move along -- I thought of calling LPD, but I called them out there two years ago on something similar (people cutting down trees blocking the trails and dumping garbage) and didn't get a real response, so I'll just wait and see if they are still there next time. It'd be nice to get more mountain bikers back out at Purina and reclaim the place as a public biking trail.