Madison is threatening to take over a condo project in a fragile South Side neighborhood because the developer isn't making payments on a $2 million loan.

The city's Community Development Authority on Thursday asked staff to demand a tardy $27,000 payment and use all legal remedies available.

The developers, Lake Point Madison LLC, also face more than $500,000 in notice of lien claims and lien claims from contractors, and the CDA expects it will have to take over the mostly complete, 50-unit project on the 1800 block of Lake Point Drive.

"Lock and load," CDA chairman Stuart Levitan said.

If the $27,000 payment isn't made, the CDA can begin a foreclosure proceeding. Or the CDA can negotiate with the developer to "turn over the keys," which means the CDA would assume all responsibilities for the project, assistant city attorney Anne Zellhoefer said.

No one represented Lake Point Madison at the meeting. Attorney Ron Trachtenberg, who represents the developer, later said, "I've asked for a meeting. My client wants to sit down with them and talk about the options."

It's unclear if the developer will try to keep the project or let the city have it, he said.

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.

"You got a great, great project but a terrible developer," said Ald. Tim Bruer, 14th District, who wants the CDA to assume control of the project.

"The game is over," he said.

The redevelopment struggled due to the area's reputation, a credit crunch and the downturn in the market, Trachtenberg said.

If the CDA gets the project, 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.

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