The calculation depends on the program. In a normal multifamily, the following is the way it goes. As you will note, you calculation surplus cash at the period end (Dec or June) then you have six months to take it before the next calculation.

Only 232 programs (nursing homes) have a different process. This program allows owners to begin distribution beginning in the first through sixth month. At the next calculation of surplus cash if the client is able to calculate even a 1 dollar of surplus cash, then they did not distribute too much.

That is the process.

13.Surplus Cash.

a. Borrower must calculate Surplus Cash as of the last day of its fiscal year. Borrower may also, at its election, and if permitted pursuant to Program Obligations, calculate Surplus Cash as of the last day of the sixth month of its fiscal year. Borrower shall submit a report of its Surplus Cash calculations to HUD with its required annual financial reports, pursuant to Program Obligations.

b. Surplus Cash shall equal the sum of:

(i) Project cash and cash equivalents (excluding the Reserve for Replacement account and other HUD-required reserves);

(ii) short-term investments;

(iii) project-based Section 8 Housing Assistance Payments earned but not yet received by Borrower; and

(iv) any amounts approved for withdrawal but not yet withdrawn from the Reserve for Replacements or any other reserves or escrow accounts;

after deducting:

(v) all sums due or required to be paid within the calendar month following the date as of which Surplus Cash is calculated under the terms of the Note and Security Instrument (including without limitation principal, interest, mortgage insurance premium deposits, deposits to the Reserve for Replacements and other reserves as may be required by HUD, and tax and insurance escrow deposits);

(vi) all special funds required to be segregated by this Agreement, the Note, the Security Instrument, or Program Obligations, including tenant security deposits and any other amounts held in trust for tenants; and

(vii) all other obligations of the Project payable within the next thirty days, unless the obligation is paid subject to available Surplus Cash or subject funds for payment of the obligation are set aside or HUD has approved deferment of payment.