What is causing this long tail in the transient reponse?
The slow oscillating behavior in the system results from a pole with real part close to zero and, by looking at your step response, with a frequency close to \$0.1 \; \text{Hz}\$  \$\; (0.62 \; \text{rad/s})\$. So the poles causing it are the ones at \$s_0 = -0.02+0.58i\$ , and \$s_1 = -0.02-0.58i\$.
You should check if they really have been cancelled, and if they have not, try using root locus and different gains to change the pole positions away from the complex axis (having real parts as negative as possible).