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SCOTTSDALE, AZ-Scottsdale City Council has given the green light–and a $36.7 million taxpayer funded subsidy–to developer Steve Ellman to help him turn the vacant Los Arcos shopping mall into a “big box” retail center.

A bitterly divided council in a 4-to-3 vote approved Ellman’s plan to build a Super Wal-Mart, Sam’s Club and Lowe’s along with 40,000 sf of retail space on the 42-acre site at McDowell and Scottsdale roads. The Wednesday night meeting drew more than 200 residents, many sporting bright yellow T-shirts with the words “Go Los Arcos,” which were provided to supporters by the Ellman Cos.

The mall, once considered as a site for an arena for the Phoenix Coyotes and touted by some as the gateway to Scottsdale, became a touchstone of controversy in February after Ellman demanded a subsidy to build the $90-million, 600,000-sf project, dubbed Los Arcos Town Center.

The council’s approval of the tax subsidy, which could grow to $183 million over 40 years with inflation and interest, is the second-largest subsidy approved in the Valley, topped only by the $41.5 million that Chandler doled out to Westcor to help build the 1.4-million-sf Chandler Fashion Center mall.

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