Thank you for reporting this issue. The task requires you to upgrade a building that is already the level mentioned (so in your case you'll have to upgrade a level 3 or higher building to the next level). We are currently working on a way to rephrase the quest task for we know that it's a bit confusing right now.
Edit: For now, I'll set it to "Not a bug" because it's not really a bug, just a text that can be misunderstood easily.