HUNTINGTON — The city of Huntington has agreed to a preliminary injunction, which stops enforcement of an ordinance aimed at ridding the city of burned-out structures.

Attorneys for the city and the plaintiff, the West Virginia Insurance Federation, appeared Thursday in Cabell Circuit Court. Both sides reached the agreement late Wednesday night and Circuit Judge Jane Hustead granted the injunction Thursday.

The Insurance Federation hailed the agreement as a minor victory, while City Attorney Scott McClure said it allows both sides to continue discussions aimed at a permanent solution. Both parties are scheduled to meet with Gov. Joe Manchin’s office next month, McClure said.

Huntington City Council passed the ordinance on Nov. 10, 2008, as part of the city's home rule plan. It allows the city to withhold insurance claim proceeds from property owners if they don't tear down their fire-damaged structures. Insurance companies would be required to withhold $2,000 from every $15,000 of benefits payable to a policyholder on every total fire loss within the city. The withheld proceeds would be placed in escrow by the city and not released until all debris has been removed.

City officials argue the ordinance, which took effect July 1, would prevent property owners from abandoning burned properties. When a structure is gutted by fire, it's common for the property owner to pocket the insurance money and leave the city to pay for the cleanup.

But the Insurance Federation claims that the ordinance conflicts with general insurance laws. The withholding provisions in Huntington's ordinance conflict with value policy law in West Virginia that requires insurance companies to pay the face value of a policy in the event of a total loss, according to the lawsuit.

Delegate Jim Morgan, D-Cabell, attended Thursday’s hearing. He wrote a letter to Mayor Kim Wolfe this month urging the city to repeal the ordinance. He feared enforcing the ordinance would jeopardize the statewide, five-year home rule program and ultimately impede cities from moving toward self-government.

The Legislature passed the program with intent to give cities more autonomy on taxation and administrative and personnel issues.

The home rule program also provide Huntington a chance to implement a land bank authority and a 1 percent occupation tax, but neither of those have been implemented.

A state panel selected Huntington in May 2008 to participate in the home rule project, along with Charleston, Bridgeport and Wheeling. Those cities filed a motion Wednesday to join the Cabell County lawsuit. They seek to protect any challenge to the home rule program.

The Insurance Federation has argued the home rule plan is unconstitutional.

File photo/The Herald-Dispatch

Huntington City Hall.