Bettie Jones, 55, was fatally shot by Chicago police officer Robert Rialmo who was responding to a call from the father of Quintonio LeGrier, a 19-year-old who had mental health issues.
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LeGrier's father called 911 in December 2015 and said that his son had become violent and threatened him with an aluminum baseball bat. Rialmo said he fired when the teen swung the bat at him. Jones, a neighbor, had come out of her apartment to open the door for police when she was shot. LeGrier also died.
Lawyers for LeGrier and Jones have disputed Rialmo's account.
A Chicago police watchdog group ruled the shooting was unjustified and recommended the firing of Rialmo. Police superintendent Eddie Johnson disagreed and defended the officer's actions.
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An official confirmed that this is a "proposed settlement" that will next be presented to the city's finance committee.
"The Department of Law does not comment on potential settlements prior to testifying at the Committee on Finance," said Bill McCaffrey, a legal spokesman for the city.
The families of both Jones and LeGrier filed lawsuits, which were consolidated and set to be tried next week. The LeGrier lawsuit will continue as scheduled.