The $2 million proposed to settle a lawsuit by black police officers isn't huge by Minneapolis standards, but the impact goes beyond the numbers.

In recent years, Minneapolis city officials have touted their success in reducing settlement payments involving lawsuits against the police department. That trend is reversing rapidly.

On Friday, the City Council could vote to approve the tentative settlement of a racial discrimination suit filed by five high-ranking black officers.

The fallout from the discrimination suit could go beyond dollars and cents. If the allegations are true, some community leaders are challenging Mayor R.T. Rybak to decide whether Tim Dolan should remain police chief and Michael Jordan should continue to head the city's civil rights commission.

"The fact that the city had been saying they had no idea this was going on and now may be approving a $2 million settlement raises the question: Does the mayor retain the same confidence in Jordan and Dolan?" said Ron Edwards, a member of the Police Community Relations Council and a Police Department critic. "It says to me some folks needs to step down."

A federal magistrate judge ordered Rybak and others connected to the suit not to comment on the settlement.

Jeremy Hanson, the mayor's spokesman, said the City Council and the mayor will be briefed on the settlement in a closed session Friday. They will then provide "further direction" to the city attorney, and a vote to approve the settlement could take place.

The federal suit, filed in December, alleges a long history of discrimination against black officers. The suit alleges that racial discrimination in the areas of promotions, overtime, training opportunities and disciplinary actions have become institutionalized since Dolan became chief in 2007.

The suit was filed by Lt. Don Harris and Lt. Lee Edwards, who were demoted by Dolan. A third officer, Sgt. Charlie Adams, was transferred from the homicide unit over a series of alleged insubordination incidents. The other two officers are Lt. Medaria Arradondo and Sgt. Dennis Hamilton.

While the suit alleges Dolan has a poor track record in promoting officers of color, he has appointed three officers to high-ranking positions. He appointed Edwards to inspector of the Fourth Precinct, Valerie Wurster, who is black, to Deputy Chief and Janee Harteau, an American Indian, to inspector of the First Precinct. About 18 percent of the department's employees are people of color, the highest in the department's history.

The settlement reached Tuesday would create a unit headed by a deputy chief to oversee diversity and race issues, and require an independent audit of the department's diversity efforts.

Clyde Bellecourt, co-chairman of Minneapolis' Police Community Relations Council, said he applauded the deal and was sure the City Council would approve it.

"We have done everything we could to recruit American Indians from our community into the department, and they never seem to make it through the process," he said. "This settlement should help all people of color. We need more decisions like this."

Edwards said the city should have been on notice about racial tensions in the department when the officers talked to Jordan. Edwards himself spoke about the issues during a City Council meeting last fall.

"That puts pressure on department leadership to do the right thing," said Zack Metoyer, co-chair of the Police Community Relations Council. "We're very happy to see that the institutional racism within the Minneapolis Police Department is being addressed."

Metoyer said that improvements at the department depend on its leadership. "We ended up with a chief who basically started tearing down the work we had done," he said, referring to Dolan. "It all boils down to who's running the department."

Until 2007, lawsuit settlement payouts involving the Minneapolis Police Department had been shrinking for several years. In 2004, the total was $2.1 million; 2005 dropped to $1.4 million and 2006 was $650,000, according to a police department annual report on its internal affairs unit. No figures were available for 2007.

The largest payout for the department came in November, when the City Council paid $4.5 million to settle a suit by officer Duy Ngo, who was seriously injured when another officer shot him six times with a submachine gun in 2003.

The two previous largest settlements involving the department were just over $1 million.

A proposed settlement of $2 million would pale alongside the $8.75 million the city paid to the owner of a proposed metal shredder to settle a lawsuit in 2000.

After a story about the proposed police settlement appeared in Wednesday's Star Tribune, the city's legal team called and sent an e-mail to the City Council "that pursuant to the order of [U.S.] Magistrate Judge [Susan Richard] Nelson, you are not free to comment on the settlement process because it is confidential."

"This is a delicate stage of the negotiations and I'm obliged to get the opinions of my peers before I come to a conclusion," said Council Member Don Samuels before heading out of town on a previously planned trip on Wednesday. He will not be at Friday's scheduled closed door session.

Council Member Ralph Remington canceled a scheduled trip to attend the Friday session. He said while he couldn't talk specifically about the case, "My main emphasis is when we are discussing this is that we give the officers all of the dignity and respect that they deserve."

Remington added: "They are the part of the team that's bringing these crime numbers down that Dolan and Rybak praised earlier this week. We have to remember that."

Staff writers Terry Collins, Randy Furst and Steve Brandt contributed to this article. David Chanen • 612-673-4465