PSV announced on Friday that both parties had signed a letter of intent, meaning that the club, mayor, and alderman had approved of the plan to expand PSV's stadium with "at least" 10,000 seats. The Philips Stadion currently has a capacity of 35,000 spectators.
PSV expect the expansion works to start in 2027.
"The city is growing, and with it the need for places for recreation, culture and sport," Eindhoven mayor Jeroen Dijsselbloem said.
"Interest in a seat in the stadium has also been growing for years, as can be seen from the waiting list. I think a lot of PSV fans will be happy with the extra seats that will become available."
The expansion means that PSV will not leave their Philips Stadion, which has been the club's home since its founding in 1910.
"The fact that the stadium can continue to grow right here – on the historic grounds on Frederiklaan, where PSV's success once began – is more than just an investment in PSV and football," alderman Stijn Steenbakkers added in PSV's statement.
"It is an investment in the soul of our city. Because it's not just about extra seats, but also about more stories, memories, dynamism and solidarity. All those red and white shirts you see walking around on match days, those images and that feeling, that's priceless."
Complex construction
PSV director Marcel Brands says the expansion of the current stadium will be a complex project. "Research showed that this is the best location to work this out. It has been an iconic location for over 112 years," Brands told ESPN.
"The initial thought is to expand the North stand, that's the best possible place. However, we want to at least look at all four stands to see what's possible within the current restrictions."
Brands admits the club have looked into moving away from the current location at the Frederiklaan.
"I was very happy with the outcome of the research. It started here, at the Philips Stadion. This is the DNA of the club. It's still a beautiful and modern stadium that we want to improve.
Most important is that we get to serve more people. We have a waiting list of 20,000 people; the region is growing enormously, so you want to take the next step. The project will also generate extra income, of course, because you consider commercial possibilities. We're currently at our limit in that sense, so it's crucial for the next generation that we can grow further here."
Brands says PSV want to finish the expansion before 2030. The club will not temporarily relocate to another stadium during construction.