It’s a big problem, the 38-story HSBC tower. Buffalo’s tallest building is about to become its own ghost town, and the ripple effects could wash out the regional real estate market.

To figure out how to manage what could be a catastrophic problem, a panel from the Urban Land Institute was brought to Buffalo for three days last week. Its members concluded that there is a way out of the mess, but one that will require massive public sector help. It’s a risky idea but, in the end, one that has to be measured against the disastrous prospect of doing nothing.

With a $75 million balloon payment due on its mortgage in January 2015, the likelihood is that the building would wind up in foreclosure or bankruptcy. A new owner, or potentially the same owner, could purchase the building at a steep discount, slash rents to attract tenants and upend the rental market by emptying out other buildings downtown, leaving the market in even worse shape.

“The do-nothing alternative is that the building gets sold at auction, and there is a considerable likelihood that the new owner will cannibalize the market,” said Charles Long, chairman of the panel and a developer from Oakland, Calif.

The only real alternative, according to the visitors from the Urban Land Institute, is to form a public-private partnership to transform the edifice into a mixed-use building that could include retail, office space, apartments or condominiums and a hotel with a restaurant and observation deck.

The concept is not for taxpayers to offer a bailout to a big developer, but to become a partner in redeveloping an asset that cannot be allowed to become the AM&A’s of the 21st century – and on a vastly larger scale. That partnership could include taking an ownership stake in the project, and accepting the risks and rewards of entering the commercial real estate market.

It’s premature to recommend this course of action. It requires more study by the city and, potentially, the state. Frankly, governments should approach this prospect skeptically, but with an open mind. The goal should be to see if some arrangement other than public ownership would serve the public interest as well. And if the conclusion is that there is no other practical choice, the public’s role should be limited to the point that taxpayers’ share of the building can be sold with no loss and, better yet, at a profit.

This is a fast-moving challenge for the city. The tower’s 850,000 square feet of space is about 90 percent occupied right now, but will be 95 percent vacant by the end of this year, after HSBC Bank USA vacates and Phillips Lytle LLP moves to its new headquarters, now under construction in the former Donovan State Office Building. Only a year later, the balloon payment comes due.

That means there is little time to waste. It would be better if some alternative other than public ownership could be made to work, but that prospect is far better than allowing a critical building, in a strategic location, to fail.