The existing air-conditioning system has deteriorated and is failing to provide uniform climate control throughout the palace. Increasing utility costs tied to the system have contributed to an ongoing budgetary shortfall shouldered by the Friends of 'Iolani Palace, the organization that operates the palace.

Improvements will include removal of the air-conditioning chillers from the palace towers and construction of three new 50-ton chillers to be located on the palace grounds, replacement of fan coil air conditioning units, mold remediation improvements and electrical improvements.

Planning and design is expected to begin in September.

Project cost is estimated at $5.4 million. The Lingle administration expects the remaining $4.5 million to be included in its budget request for next year.