Time is running out for residents of a complex of apartments in Kailua, which have been slated for demolition because its cesspool system is barred by environmental regulations.

It's a looming crisis for several hundred of its residents, who must vacate in about 18 months. But it's also an opportunity for the state to show its commitment to meeting Hawai'i's affordable housing challenge.

The 217 units, mostly rentals, comprise the Kailua Palms, Coral Apartments and other aging walkup buildings facing Kailua District Park. There's no doubt that developer D.R. Horton is compelled to tear down and rebuild, and that this will be a costly process, with all the environmental cleanup and sewer upgrades that must be put in.

But perhaps the company doesn't have to go it alone.

This gives the perfect opening for some creative lawmaker to propose a public-private collaboration that may enable some of the units to remain affordable.

The state has a fund earmarked for affordable housing projects, thanks to the Legacy Lands Act, and this fund could be tapped so that the state shares in the costs of the environmental improvements or finance part of the housing construction itself.

In return, Horton should be able to lower the price for the condominiums a little closer to the point that the current leasehold apartment owners could afford. And the state could negotiate for a portion of the project to be kept in the rental market.

While it would be difficult to accommodate the same number of lower-income renters in the new project, there's no reason the state and the builder should sit back and watch all 217 units be scratched from the affordable inventory.

Something must be done, and the government and private industry can play their parts.