Stem cell company Cellular Dynamics International has the blessing of the city of Verona — along with a promise of up to $6 million in financial incentives — to build its new headquarters in that community.

The Verona City Council voted unanimously on Monday in support of the proposal.

Cellular Dynamics map

It calls for construction of a $40 million laboratory and office building on Kettle Moraine Trail, just east of the Verona Technology Park at highways PB and M.

The building will be 133,700 square feet, with clean rooms, quality control labs, processing rooms and offices.

Developer John K. Livesey will build and own the structure and CDI will lease the space.

“I think people are excited for the project,” said Adam Sayre, Verona’s director of planning and development. “It’s a great company for us to welcome to Verona.”

Cellular Dynamics was founded in 2004 by James Thomson, the internationally known UW-Madison pioneer in the stem cell field. The company has been housed in Madison at University Research Park, 525 Science Drive.

CDI has become a major stem cell manufacturer. It uses adult tissue or blood samples, reverts the cells to their embryonic form, then programs them into specific types of cells, such as heart, liver or nerve cells.

In addition to selling its stem cells to customers, CDI is working on its own potential stem cell treatments for diseases that include Parkinson’s and age-related macular degeneration. It recently split into two units, one focusing on cellular therapeutics and the other on life science markets.

Japanese conglomerate Fujifilm Holdings Corp. bought CDI for $307 million in 2015.

According to plans submitted to the city of Verona, the new building for CDI is expected to be completed by the end of 2018 and will house about 280 employees. That would nearly double CDI’s staff within two years. As of December 2016, the company had about 160 employees, with 25 of them at its California branch.

The plans provided to the city also call for a second phase of construction that will add 65,000 square feet to the building, with room for another 130 employees.

Kaz Hirao, chairman and CEO, said there’s no timetable for phase two. “The expansion will be based on new product development, therapeutic regulatory timelines, customer demands and general economic conditions. There are no concrete plans for the space at this time,” he said.

The city of Verona is providing up to $6 million in tax incremental financing. Under terms of the transaction, the Livesey Co. will pay its construction costs upfront — including the cost of extending the road and the utilities. As the structure is built and property taxes are imposed, 80 percent of the property taxes paid will go back to the developer and the city will keep the other 20 percent, Sayre said.

The Wisconsin Economic Development Corp. also is “in discussions” about possible incentives but no agreement has been reached yet, spokesman Mark Maley said.

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Judy Newman is a business reporter for the Wisconsin State Journal.