Why not just add a button that resets all your upgrades, but you DO NOT get your spent resources back or you can pay some price to de-upgrade one point at a time
I think that upping the level of players being able to kill pirates as they gain streaks would help deal with pirates or you could have it so that pirates have to be below or equal to the level limit as before, but that police could be higher than the level of the area and pirates could attack those people as well.