Is it against KYcode to locate an electric hot water heater in the crawl space? I have a walk in crawl space where air handler is located. It never freezes there and seems like an ideal place for the water heater. It is now in unheated garage that can freeze on coldest nights.

I don't know that it is against code. If it goes in the crawl space, make sure you use cement blocks about an inch or so high and put treated wood on that then water heater on that. Make sure the area can not flood or retain water. In Georgia water heaters are in crawl spaces. I have seen gas heaters in them too. They dig a hole and install the heater in the hole. I will not touch that situation, neither will I service one. It opens up too many liabilities.