Residents living in the Beachwood area in north Merced claim their water and air were tainted by chemicals from a nearby plant.
There are currently two separate lawsuits pending. The one settled Friday dealt with the city addressing only the physical damage left from the flooding.
Demetrio Quintero is one of 2,200 plaintiffs in the flooding and a contamination lawsuit against five defendants which include the city of Merced. Flood video from 2006 shows the extent of the damage left behind from the ferocious storms that spring.
"You never know what's going to happen because it happened before. So it's in the back of your mind, you're like hey it can happen again. And on occasion I walk along the canal bank and I'm like don't let it happen again. But it is what it is." said Quintero.
Back in March -- a federal grand jury found residents could have been exposed a cancer-causing chemical that came from an irrigation canal that residents frequented for more than 25 years.
They also found possible contamination through flood waters in 2006 that transferred the chemical into peoples homes.
Merced city manager John Bramble says the city did not admit any fault by this choosing to settle Friday. Instead he says it was made for financial reasons.
"Rather than spend more money on attorneys, it was decided that it would be better to make a settlement claim." said Bramble.
That's fine according to Quintero who is also involved in the more lucrative contamination lawsuit. He says he's constantly worried about the welfare of his family as his lawyers continue to take samples from his home.
"About last week everybody was, 20-30 were in our houses in the backyard underneath collecting dirt samples. Measuring you know, walls, taking pictures. It's hectic but hey we've got to deal with it."
The Merced City Council voted in May to approve the $1.5 million to settle despite laying off dozens of police and fire personnel. But Bramble says the settlement money wouldn't have been able to save any jobs during the budget hearings.
"We used those reimbursements plus some money out of our sewer fund to pay off the $1.5 million. So none of this money came out of the general fund." said Bramble.
Action News spoke with the attorney representing the more than two thousand plaintiffs in the contamination and flood lawsuit. He says they're moving forward as planned so this most likely will not be the last time this issue comes up again.