Madison is taking over a condo project in a South Side neighborhood because the developer failed to make payments on a $2 million loan and is walking away.

The city's Community Development Authority will now assume responsibility for maintenance, finishing the project, marketing and selling remaining condos at the mostly complete, 50-unit project on the 1800 block of Lake Point Drive.

Those who bought units and have been complaining about the developer's inattention and lack of maintenance cheered the move.

"We literally will be popping champagne," said Carey O'Connor, who with her husband, Jerod Elmergreen, bought a condo as their first home in August of 2006. "I couldn't be happier. We've had nothing but problems since we moved in with the developer."

The $4 million project, which replaced battered rental housing, was trumpeted as a major step in revitalizing Lake Point Drive, formerly Simpson Street, once the city's most notorious place.

Now the CDA will try to save it.

"The CDA has made substantial investments in this neighborhood," said city economic revitalization supervisor Percy Brown. "We are 100 percent committed to seeing this through as something that's going to have a positive impact and a positive outcome."

The CDA on May 8 asked staff to demand a tardy $27,000 payment from the developers, Lake Point Madison LLC of Milwaukee, and to use all legal remedies available. The developers also face more than $500,000 in notice of lien claims and lien claims from contractors.

On Thursday afternoon, Lake Point Madison informed the CDA it would turn over the project.

"My people can't afford to stick any more money in the project," said attorney Ron Trachtenberg, who represents the developers. "We're giving (the CDA) the keys. We will fully cooperate with the handover."

The developers struggled in a slumping housing market in which potential buyers couldn't get loans for purchases, Trachtenberg said.

"They're losing money on the deal," he said.

The CDA could quickly take the project, making it responsible for liabilities, or proceed with a slower foreclosure action, which would eliminate responsibility for the liens.

If the CDA takes the project right away, it would face costs of at least $2.18 million, including the loan, liens, marketing of 32 unsold units and other costs. It would cost about $18,000 a month, a preliminary CDA analysis shows.

Depending on sale prices, the CDA would have between 10 and 37 months to sell remaining units before losing money, the analysis shows.

The developers hope the CDA can sell units and use proceeds to repay the loan and pay off money owed to contractors but will cooperate with a foreclosure, Trachtenberg said.

Condo owners just want someone to address their concerns, O'Connor said.

The landscaping looks atrocious, siding is falling apart, a large, black drainage hose is used to mitigate the flooding garages, and water has started leaking into a neighbor's home, she said.

Also, owners are frustrated by a lack of promised parking, she said.

The CDA wants to act quickly on maintenance and sales, Brown said.

"We don't have any time to lose," he said, noting that there are three pending offers on units. "We want to take advantage of the home-buying season."