Chief Bill Blair had threatened legal action after Coun. Doug Ford publicly accused him of leaking information about an investigation involving the mayor as "payback."
"It was important to me to get a retraction and apology in writing so that there could be no confusion among those who had heard or read about Mr. Ford's false statements," Blair said.
Doug Ford had suggested two weeks ago that Blair helped leak information, after a Toronto Star report cited sources saying police were preparing to subpoena the mayor to testify at a preliminary hearing for his friend Alexander (Sandro) Lisi, who is facing drug and extortion charges.
Ford said that the leak was politically motivated.
"When you tell the media there's a subpoena and don't tell anyone else? That alone says it all right there. That says it all,'' he had said at the time. "It's disappointing that the police chief, in my opinion, would condone this behaviour from his own department.''
The public letter of apology and retraction comes three days after Blair filed a defamation notice against Ford.
The councillor verbally apologized on Wednesday in front of city hall media but Blair said his words didn't meet the terms laid out in the notice.
"Mr. Ford began to retreat from his comments but failed to fully and completely acknowledge that his statements had been false and totally without foundation," he said.
Ford wrote a letter to the chief on Thursday, saying that he wanted to dispel any suggestion Blair was personally involved with leaking information to the media.
"I completely and fully apologize to Chief Blair for any inference or suggestion in my comments that he has acted in a personally dishonourable way," he wrote, calling the chief a "person of high integrity."
Blair said that while criticism "comes with the turf" of being police chief, he felt he had to respond to Ford's accusations.
"Lies that go to the heart of your integrity cannot be tolerated," he said.
In the letter, Ford outlined a plan to donate $1,000 to the Covenant House, a shelter for homeless youth in Toronto. Blair sits on the board of the charity, and said it was his intention that any money recovered from damages be donated.
Mayor Rob Ford has repeatedly said the dispute doesn't involve him but added on Thursday that his brother was "sincere" in expressing his regrets.
Both Fords have publicly criticized Blair ever since a police investigation last year turned up a video which appeared to show Rob Ford smoking crack cocaine.
At a news conference last October, Blair had said he was disappointed at what the video showed.
The mayor, who later admitted to smoking crack cocaine in a "drunken stupor,'' has publicly accused Blair of wasting taxpayers' money with the investigation and challenged the chief to arrest and charge him.
Blair also addressed speculation Thursday that a member of the police service leaked information.
"We have been advised by the reporter who originally disclosed this information that she received this information from a non-police source," he said, adding that he is standing up for the "integrity of the service."
The police services board hasn't renewed Blair's contract, meaning his term will end next April.
Blair said the discussion surrounding his employment contract is confidential.
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