The settlement between the City of Houston and American Traffic Solutions comes after more than a year of litigation.
At an event at Bush Intercontinental Airport, Houston Mayor Annise Parker called the deal a fair negotiated settlement to a very contentious issue.
"We had a contract with ATS. They were claiming damages of $25 million, so I think a settlement under $5 million is a good negotiated deal for the citizens and for ATS. But the fact that we made them commit and we commited that the only dollars going into this would come from people who owe red light camera ticket money is important. I didn't want the general fund to have to pay for this, the taxpayers of Houston to have to pay for this."
In addition to the fixed amount in the settlement, the city has also agreed to pay ATS a portion of what it collects from delinquent tickets for the next three years.
ATS has agreed to remove all its cameras from intersections.
The cameras have been turned off since last August.
Councilmember and Attorney Mike Laster says from what he has been briefed on so far, the terms of the settlement appear to be reasonable.
"I think it's always better to settle than to risk the possibility of having an award or judgment or jury award or court order at the end of the day, requiring us to pay a lot more money than we would want to pay."
Laster says it's important to have this litigation finished and be able to move forward with the work of the city.
Councilmembers will be asked to approve the settlement on Wednesday.
Mayor Parker says she assumes council will be supportive and pass it quickly.
If it gets council approval, ATS has 60 days to remove all of the cameras.