New London — The City Council accepted settlement agreements for two police captains Monday, ending a seven-month standoff over the terms of retirement for William Dittman and Michael Lacey.

The vote was 5-1 with Councilor John Maynard opposing the measure, saying he wanted a commitment from the police union that it would no longer seek such lucrative retirement packages. Councilor Anthony Nolan, who is a police officer, recused himself from the discussion and vote.

Councilor Adam Sprecace, who has been opposed to the agreements, said he changed his mind after hearing that the city's insurance company estimated it could cost the city $1 million in legal fees to fight lawsuits by the two officers.

Sprecace agreed that the city has negotiated retirement packages that are "too generous." But he said the cost of not settling is too high.

In a letter to the City Council, Mayor Daryl Justin Finizio admitted he acted too quickly when he signed the enhanced retirement packages in January with the captains. He promised to amend and revise the process of how the administration enters into separation and retirement agreements.

"As this was done at the beginning of the year, and within thirty (30) days of my swearing in as Mayor and the change to a different form of government, there was a certain learning curve that the administration was in the middle of; I should have done a more thorough job of reviewing the necessary steps and procedures …" Finizio wrote in a June 25 letter.

The city's insurance company, the Connecticut Interlocal Risk Management Agency, has already informed the city it would withdraw its coverage over the Dittman lawsuit if the city did not accept the settlement agreement.

"I would expect CIRMA to take a similar position with regard to the Lacey v City case," Finizio said.

He added that CIRMA has informed him the cost to the city to defend the lawsuits would likely be more than $1 million.

In January, Finizio announced a restructuring of the police department and that Dittman, a 35-year veteran of the department, and Lacey, a 28-year veteran, were retiring. At the same time, he announced that Deputy Chief Marshall Segar's one-year contract was not being renewed. Segar had been with the department for 20 years, and had been deputy chief since 2009.

The council refused to fund the retirement packages, saying it only learned of the settlements after they were signed by Finizio.

Dittman and Lacey each filed lawsuits, alleging breach of contract.

In Dittman's package, he was to receive his base salary of $89,811 through June 30, 2012; he would be paid for all accrued vacation, holiday and compensatory time at his hourly rate; and his family health insurance and a supplemental plan would be paid by the city for the next seven years. The city also would cover the health insurance for his wife until she becomes Medicare eligible and for his children, until they are deemed ineligible due to age.

Lacey's retirement agreement included a $20,000 payment for the current year, and another $160,000 over the course of four years, which equals $40,000 a year, to cover the difference between his retirement benefits and his salary. The mayor signed the documents Jan. 6.

k.edgecomb@theday.com