Is the 421-a 2.2% Surcharge normal? (New York, York: real estate, apartment, lease)

[random2]

I just got my lease and there is a rider that says they can charge a 2.2% increase each year in addition to the increases set by RGB. Is this normal? I thought that with rent stabilization it would only increase by what RGB sets each year. This would make rent increases be 3.7-4.2 percent if looking at the normal mandated 1.5-2% increases each year from RGB.

Has anyone else seen this? Is there any way to get out of it or do I just have to sign if I want this apartment?

[Filomena44]

Good question. What building is it? I found this from a Google search but I'm not sure how to interpret it:

"In 421-a buildings, where the tax benefits are for 10 or more years, and provided that a “2.2%
lease rider” is offered by the owner and signed by the tenant, owners can collect annual “421-
a” surcharges equal to 2.2% of the rent charged at the beginning of the period of gradual
diminution (when real estate taxes begin being phased in)."
from https://hcr.ny.gov/system/files/docu...SHEET%2041.pdf

Kinda makes it sound like it's not mandatory? But I'm not sure. I'm hoping for a 421-a building myself, and definitely don't want to pay a surcharge, so I'm curious to see if someone can give a better answer.

[random2]

610 Myrtle Ave. I thought the 2.2% surcharge was only applicable to the market-rate units and not the affordable lottery units. I've called HPD, but haven't received a response yet.

[Filomena44]

Yeah, I think you're right. I just found this:

"The 2.2% surcharge is collectible primarily from tenants in market rate units in buildings that receive 421-a (subdivision 1-15) tax benefits. It is not collectible from tenants in market rate or income restricted units in buildings that receive 421-a (subdivision 16) tax benefits (Affordable New York Housing Program Benefits)."
from https://hcr.ny.gov/rent-stabilizatio...protection-act

It seems like you should not have to pay it. Definitely talk to someone at HPD.