CONSENT ITEM
G-4
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE UTILITY BOARD FROM: TIKAN SINGH, GENERAL MANAGER
DATE: JULY 27, 2026
SUBJECT: CONSIDERATION TO APPROVE IBY PROPERTY OWNER LLC WATER RATE ADJUSTMENT, EFFECTIVE AUGUST 1, 2026
BACKGROUND:
The City has an agreement with IBY Property Owner LLC to supply water (“Agreement”) to the Irwindale Brew Yard brewery in the City of Irwindale (“Brewery”). Pursuant to the agreement, rates are to be adjusted every 2 years using an agreed-upon formula that incorporates specified cost components.
The recommended action seeks authorization by resolution to implement rate changes pursuant to the Agreement, effective August 1, 2026.
RECOMMENDATION:
Staff recommends that the Utility Board take the following action:
1) Adopt Resolution No. 2026-UB-06 adjusting water rates for IBY PROPERTY OWNER LLC, effective August 1, 2026.
ANALYSIS:
On February 23, 2009, the City of Azusa entered into a restated water supply agreement with MillerCoors USA LLC, which set rates for water services provided to the brewery located in the City of Irwindale. MillerCoors changed its name to Molson Coors USA LLC on April 1, 2020. IBY LLC (a wholly owned subsidiary of Pabst Brewing Company) has since acquired the brewery. The agreement was assigned to IBY LLC on July 20, 2020, and then to IBY Property Owner LLC on December 21, 2020. Pursuant to the agreement, rates are to be adjusted every two years after May 1, 2010, and calculated using a cost-based formula set forth therein. The rate adjustment methodology used for IBY parallels the City's cost-of-service process for determining water rates for all customers.
The rate calculation methodology specified in the agreement takes the fixed and variable cost components of Azusa Light & Water’s forecasted net revenue requirement. It allocates those costs proportionately to IBY’s expected water usage and meter capacity compared to the rest of the water IBY PROPERTY OWNER LLC Rate Adjustment
July 27, 2026
system. Fiscal Year (“FY”) 2026-27 forecasts are being considered for IBY’s upcoming August 1, 2026, rate adjustment date.
The water utility’s forecasted net revenue requirement, subject to rate adjustment calculations for the FY 2026-27, is about $38.7 million. Fixed costs are recovered through meter charges, and variable costs are recovered through commodity charges. For rate design purposes, 40% of the budget is assigned to the fixed cost/meter charge component ($15.5 million), and 60% to the variable cost/commodity charge component ($23.2 million). IBY’s portion of the fixed costs has been determined to be 0.3238%, and IBY’s estimated share of the commodity charges is 7.18%.
Based on the above information, Staff recommends approval of the following rates for IBY to be implemented on August 1, 2026:
PROPOSED RATE CHANGE FOR IBY PROPERTY OWNER LLC
BREWERY
EFFECTIVE AUGUST 1, 2026
Service Current Rate Proposed Rate % Increase
Flat Monthly Meter Charge $3,585.82 $4,178.11 16.5%
Volumetric Charge per CCF $3.14 $4.07 29.6%
According to the agreement, the rates will be effective for two years. At that time, Staff will again review pertinent information and formulate an update of the contract water rates.
FISCAL IMPACT:
The August 1, 2026, rate adjustment for IBY Property Owner LLC is expected to increase water revenues by about $388,061.63, assuming the Brewery's consumption pattern remains at approximately 409,547 CCF annually after IBY's assumption.
IBY Property Owner LLC Rate Adjustment
July 27, 2026
Prepared by:
Danny Smith
Utilities Administrative & Finance Manager
Reviewed and Approved:
Tikan Singh
General Manager
Reviewed and Approved:
Sergio Gonzalez
City Manager
Attachments:
1. Resolution 2026-UB-06 Adjusting Water Rates for IBY Property Owner LLC
2. IBY Property Owner LLC Rate Calculation Model 2026
3. MillerCoors Amended and Restated Water Supply Agreement