Redding Developer K2 Files $7.5 Million Lawsuit Against Property Manager Over Affordable Housing Portfolio
- Rex Ballard
- Jul 22
- 3 min read
Complaint alleges unsanitary conditions, security failures, and financial mismanagement at multiple Shasta County properties, including Burney Commons Apartments
A Redding-based developer has filed a $7.5 million lawsuit against the company responsible for managing its portfolio of affordable housing properties across Shasta County.
K2 Development Properties, a family-owned firm led by brothers Allen and Daniel Knott, filed the civil complaint against its property management provider. The suit covers eight multi-family affordable housing complexes and alleges problems including unsanitary conditions, security failures, and financial mismanagement.
According to initial reporting, one specific example cited involves Burney Commons Apartments on Mackinac Street in Burney. The complaint states that unauthorized individuals were found illegally occupying common areas of the property.
Public comments on social media and other news reporting about the lawsuit have identified the management company as Property Upsurge, a Redding-based property management firm. Property Upsurge appears to have been handling management duties for K2’s portfolio of properties prior to the filing of the lawsuit.
K2’s Business Model and Use of Public-Private Financing
K2 Development Companies has grown into one of the more active developers in the North State by focusing on mixed-use and affordable housing projects. The company has successfully secured competitive public funding and formed partnerships to advance projects that include affordable housing units and community amenities.
Notable examples include:
Block 7 in downtown Redding: A roughly $111 million mixed-income project developed in partnership with the McConnell Foundation and the City of Redding. It received approximately $20 million through California’s Affordable Housing and Sustainable Communities (AHSC) program, along with tax-exempt bond financing and involvement in the Low-Income Housing Tax Credit (LIHTC) program administered by the California Tax Credit Allocation Committee (CTCAC).
Cascade Village in Shasta Lake: A mixed-use development with affordable housing that received more than $16.5 million in AHSC funding. Partners included the City of Shasta Lake and the Redding Rancheria.
K2 has built its portfolio by blending public grants, tax credits, tax-exempt bonds, and private/nonprofit partnerships. This approach has allowed the company to deliver projects that include rent-restricted units while also incorporating market-rate components and commercial space. The firm has been involved in hundreds of millions of dollars in development activity across Redding and surrounding communities over more than two decades.
Lawsuit Details and Current Status
While K2 has successfully navigated complex public-private financing structures to grow its development footprint, the complaint raises serious questions about the ongoing management and condition of some of the resulting properties now managed — until recently — by Property Upsurge.
As of today, public records have not named the management company. No public response from Property Upsurge has been issued. Full details of the claims are expected to emerge as the case proceeds in Shasta County Superior Court.
K2 representatives have not yet issued a public statement on the matter.
Context
Affordable housing developments in California frequently rely on layered public financing tools, including grants, tax credits, and bonds. These programs are designed to leverage private investment for projects that serve lower-income residents. The current lawsuit highlights potential challenges in the management phase of such developments, even when the initial financing and construction were successfully completed.
