You had most of your facts right, LRGJr.
Chicago changed to blue when the new police superintendent was hired in 1960. Former Stanford U professor and police administrator Orlando W Wilson was first hired as a consultant by the city to chair a committee to find a new head of the CPD, but the mayor and city council ended up giving him the job to change the dept's slipping public image and help pull it out of a few significant scandals.
OW Wilson ran the department like a corporation and closed old, antiquated station houses. He also put most officers in vehicles. Prior to 1960, cops walked foot beats or rode 3-wheel Harleys. Police stations had 2 marked cars and a paddy wagon. Wilson bought hundreds of new vehicles in all shapes and sizes. 2drs, 4drs, full-size, compact cars and station wagons. Part of this positive PR push was to make these new vehicles "conspicuously marked". His research and teachings had leaned toward blue as the color more associated with police and/or authority. The blue and white color scheme was chosen and the new patrol vehicles were all adorned in this new look with reflective blue stars and POLICE lettering. Wilson also wanted to set Chicago Police cars apart from all the other emergency vehicles on the road. He wanted to make sure the public as well as the criminals knew when the CPD was on the way. He lobbied state legislators to change the law regarding emergency lighting. IL Vehicle Code was amended to read that police vehicles in all cities in IL with a population of 1/2 million or more will be equipped with blue lights. Since Chicago was and still is the only city to fall under that category, CPD remains the only agency with solid blue lights.
During his 7-year tenure as superintendent, OW Wilson turned the CPD into the world model of municipal police department efficiency with the most modern, cutting edge equipment, communications and training. The base salary for a patrolman also more than doubled in his term, making the job something that was honorable and desired civil employment. This also brought in a stream of better, smarter, more qualified personnel to the ranks. It also raised the image of the Chicago Police Department in the eyes of a weary, un-trusting public. Wilson was the father of community policing that so many agencies still pride themselves on today.