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PORTLAND -- A lawsuit against Portland police for the custody death of a mentally ill man in 2006 has been settled.

As part of the deal, the City of Portland agreed to pay $1.6 million to the family of James Chasse, Jr., according to city officials. The funds will come from self-insured reserves, excess from insurance carrier and there would be no impact on the general fund.

The deal also required the police bureau to release sensitive internal reports into the September 2006 incident.

A federal judge dismissed the lawsuit by the Chasse family in an order filed Tuesday morning after the court said it was informed of the settlement. Now the city council will still needs to sign off on the settlement for final approval.

Mayor Sam Adams, city commissioner Dan Saltzman and the Chasse family held press conferences Tuesday afternoon to discuss the settlement, as well as policy changes involving the police bureau and the mental health system.

More: Chasse death leads to more training for police

The family had sued the city after Chasse was tackled by a Portland police officer and suffered 16 broken ribs and a punctured lung that led to his death while he was in custody.

Mayor Sam Adams expressed his gratitude to the family, police and the city in a statement Tuesday.

The resolution of the Chasse case brings to a close a very troubling chapter in the relationship between the Portland Police Bureau and the residents of this great city, Adams said. The Chasse family has had to endure a very public examination of what is, at the end of the day, a very personal matter the death of a loved one and the ability to know the facts, grieve the loss, and begin to move on. Read: Adams' statement

Chief Rosie Sizer said in a statement she was relieved by the settlement.

I believe that the Portland Police Bureau and the individual officers have been unfairly demonized. James Chasse's death was a horrible accident and not a beating death. That's what the Bureau's investigation showed, and nothing in the litigation proved otherwise. More:Read the statement

Chasse died in police custody in 2006

James Chasse Jr., who suffered from schizophrenia, died in September 2006 after he was tackled by police officers who chased him for allegedly urinating in public. He was also shot with a stun gun.

Officers took him first to the Multnomah County jail but a nurse told them Chasse could not be booked in his condition.

The family had already settled for $925,000 with Multnomah County for a sheriff's deputy involved in the death, and a reported $600,000 with an ambulance company. More: County approves $925,000 settlement

In November, Saltzman, who oversees the Portland Police Bureau, recommended the two Portland officers involved in the death be disciplined. Saltzman said Sgt. Kyle Nice and Officer Christopher Humphreys should be suspended for failing to require that Chasse be taken to a hospital.

The federal civil rights lawsuit filed by Chasse's family accused Portland police officers of excessive force and denying Chasse appropriate medical attention.

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