Drew, this used to be asked all of the time. Clients try to interpret “mid-year” as something other than mid-year. To avoid further discussion on this, HUD clarified in the new Regulatory Agreements the exact date. Here is what is says:
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
This, of course, does not apply to older agreements, but it makes clear HUD’s position on the matter. If you let the client do this, the risk is that HUD will notice the date and come back against the client. I have no idea how likely that is.