The ordinance I described was administered with a pretty fair does of logic. It was pretty obvious from the outset which boats had no prayer of ever passing, and they were the ones the city wanted out of the marina.
As I recall a few boats had to be towed in partway through the test due to engine failure, overheating, whatever. But it was obvious which of these boats would be "seaworthy" if the problem was fixed and which ones would not be. So my guess is that the city cut the owners some slack if their boat was in decent shape but just had an engine issue that needed repair.
The whole exercise had only one objective--- to get the hulks and derelicts (boats and people) out of the marina. And since there was no other place for the boats to go, there was only one outcome: the boats were destroyed. As I recall it only took a few years to achieve this. For all I know the ordinance was rescinded once the junkers were gone.
It was kind of a local attraction for the first year or two it was in effect--- a lot of people would go down the day of the test just to watch the fun, the TV stations would cover it, and so on. And it was very effective. When I was a little kid after moving to Hawaii we'd go down to the yacht basin and look at the boats and there were some truly amazing "houseboats." Some were actually quite nice but most of them were barely afloat and were just rubbish. Many of them didn't even have engines so they failed right off the bat. By the time I left in 1979 there were no "houseboats" in the marina at all that I recall. There were still liveaboards but they lived on "real" boats.
Of course nothing is ever totally fair. I recall one houseboat in particular that was very nice. It had been built on a small barge and so never had an engine. It was cute, neat, clean, well kept up with flower pots on the deck and so on. We never got to know the couple who lived on it but they always said hi when we walked by. Unfortunately the ordinance made no allowance for "nice" houseboats--- it was all about proving their seaworthiness. With no engine that nice little houseboat didn't stand a chance and it was hauled off and broken up along with all the junkers.