May 7 (Bloomberg) -- The California Institute for Regenerative Medicine awarded $271 million to 12 research institutions based in the state to construct new laboratories to conduct stem cell research.

As a condition of receiving the state grants, the institutions pledged to spend an additional $560 million from outside donations and their own funds, according to a statement e-mailed today by the stem cell agency. The building boom will add almost 800,000 square feet of research space in the next two years, the agency said.

California Governor Arnold Schwarzenegger said in the statement that the funds will accelerate medical research and provide a financial stimulus that ``is exactly the kind of good news our economy needs right now.''

The regenerative medicine institute was created by California voters when they approved Proposition 71 in 2004. The measure committed the state to issue $3 billion in bonds to finance stem cell research during the following decade.

Seven institutions were designated ``CIRM Institutes'' eligible to receive the largest grants. They were Stanford University, awarded $43.6 million; a group of research centers in San Diego, which will receive $43 million; the University of California, San Francisco, $34.9 million; the University of Southern California, $27 million; and University of California campuses in Irvine, Davis and Los Angeles, each $19.9 million to $27.2 million.

The Buck Institute for Aging Research in Marin County was awarded $20.5 million and the University of California, Berkeley, will receive $20.2 million. University of California campuses at Santa Cruz, Merced and Santa Barbara will get the smallest grants, ranging from $3.2 million to $7.2 million.

``This Prop. 71 stem cell research facilities program is one of the largest building programs ever dedicated for a new field of medical science and it will deliver an impact that will be felt worldwide,'' said Robert N. Klein, chairman of the stem cell agency's governing board.

To contact the reporter on this story: Rob Waters in Washington at rwaters5@bloomberg.net.

Last Updated: May 7, 2008 16:03 EDT