A proposed $4.5 million to improve an antiquated air-conditioning and electrical system for 'Iolani Palace would greatly reduce an estimated $35,000-plus per month drain on palace finances and help ease the money woes that have plagued the palace for years.

The funding proposal, included in the Lingle administration's biennium budget request, and improvements designed to make two auxiliary buildings on the palace grounds more accessible are the latest news in the saga of the historic palace, which was built by King David Kalakaua as his royal residence in 1882.

The accessibility renovations are set to start next week, and the first contract for the air-conditioning work could go out later this year.

The air-conditioning system has been a major cause of financial woes and Kippen de Alba Chu, Friends of 'Iolani Palace executive director, hopes the Legislature will keep the funding in the final budget when it's approved in May.

The faulty system is a major reason the palace's monthly electric bill is averaging about $24,000, Chu said. It's also costing an additional $12,000 to $15,000 in monthly maintenance and repair bills, he said.

"Things keep breaking down and we have to order new parts," said Chu, who took over as executive director in August.

Overall, the Friends are running at an average monthly deficit of about $40,000, Chu said.

"We are showing increases in revenues from our gift shop, but our ticket revenue is down, so they're kind of balancing each other out right now," he said.

"We have had private contractors come in to do an energy assessment for us and their figures so far are indicating that if we switch to a new A/C system, we could actually almost cut our electricity costs in half per month," he said.

ACCESSIBILITY UPDATES

The Department of Land and Natural Resources is footing the $279,169 bill for the accessibility improvements at the Kana'ina Building and the 'Iolani Barracks. Both structures, as well as the palace, will stay open to the public during the work, expected to be done in June.

At Kana'ina, the former archives building now used for administrative space, improvements will include replacing the wheelchair ramp, upgrading the restrooms and installing a new fire alarm system.

The building was constructed in 1906 by the U.S. government. It was restored in 1987.

Improvements at the barracks, home of the Hawaiian Royal Guard under the monarchy, will include new ramps to the video theater, gift shop and lobby lockers, as well as upgrading of a unisex restroom.

The barracks building, also known as Halekoa, was completed in 1871 at the site of the existing state Capitol.

It was relocated in 1965, block by block.

The $4.5 million funding proposed for the air conditioning would be in addition to $900,000 appropriated last year to cover planning, design and some construction for the project.

Chu said the Friends, assuming passage of the funding by the Legislature, likely will seek proposals for the project by the end of the summer.

FINANCIAL STRUGGLES

Palace operations have had financial difficulties since the mid-1990s, when the state reduced and then eliminated the Friends' $500,000-plus annual subsidy.

Last year, longtime Friends supporter and Campbell Estate heiress Abigail Kawananakoa gave the palace $110,000 to meet payroll, cover electricity bills and take care of other expenses.

The state Legislature, meanwhile, approved a $600,000 grant to help the Friends meet its financial obligations. Chu said he hopes to see some of that funding released in the next few months.

"That would help reimburse us for electricity costs," he said.

What's also helped the Friends make ends meet is its annual fundraiser, a garden party that was held in July, Chu said.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com.