A heat-pump water heater is not a drop-in tank. The closet, the condensate, and the air it borrows from the room are part of the appliance. We place it so it runs, and so the HERS rater is not writing a correction for a closet that cannot breathe.
Recirculation that runs all day is a heating system you did not mean to buy. Controls that follow occupancy, short insulated runs, and a manifold that does not send hot water on a tour of the crawlspace — that is the work. We do it in Southern California, out of San Diego.