Since your sewer is a gravity system, if you have sewage backing up in your pit then you have a blockage or grade problem on the outlet side of the valve you are working on. This is the reason the valve was installed and once you broke the seal you are getting your neighbors sewage, I'd call the city to check their line and get your line from the house to the city sewer jetted and if needed have them run a camera in the line to check the grade problems. You should be able to service the backflow valve with no backup if your sewer is draining properly.