The payout is one of the largest settlements the city has reached in police shooting case and against Cleveland for accusations of officer misconduct. Lawyers for the the Rice family said that while the settlement is "historic in financial terms, no amount of money can adequately compensate for the loss of a life."
The statement adds, "in a situation such as this, there is no such thing as closure or justice. Nothing will bring Tamir back. His unnecessary and premature death leaves a gaping hole for those who knew and loved him that can never be filled."
Neither the city, officers Timothy Loehmann and Frank Garmback nor dispatchers involved in the fatal accident will admit to any wrongdoing, according to Cleveland.com.
The estate of Tamir Rice will receive $5.5m, while the boy's mother Samaria Rice, his sister Tajai will be given $250,000 each. The city of Cleveland has agreed to pay $3m this year and another $3m in 2017.
A lawyer representing Loehmann and Garmback stated that both police officers continue to uphold their actions as "legally reasonable," but that they "recognise the value of early legal resolution to allow some healing to begin."
In November 2014, Rice was shot dead by Timothy Loehmann, who opened fire less than two seconds after arriving at a park where the 12-year-old was playing with a toy gun . A 911 caller had reported that the boy seemed to be carrying a weapon but noted it was "probably fake". Tragically, this information was not given to the officers by dispatchers, according to a Guardian report.
Two years previously, Loehman's handgun performance was called "dismal". A 2012 letter from the Independence Department, criticised Loehmann's behaviour in firearms training, saying he was "distracted" and "weepy". The letter written by Deputy Chief Jim Polak of the Independence police further noted: ""I do not believe time, nor training, will be able to change or correct the deficiencies." In 2014, Loehmann joined the Cleveland police force.
Mayor Frank G. Jackson of Cleveland said on Monday that the situation was "not easy for me personally or the city in general," but that the settlement "protected the rights of the city and its taxpayers."
"At the end of the day, a 12-year-old child lost their life, and that should not have happened in the city of Cleveland," he said. "It should not have happened."
In another high-profile case, the city of Baltimore agreed to pay $6.4m to the family of Freddie Gray, whose neck was broken in a police van in April 2015.