SACRAMENTO, CA -- The Sacramento city council voted last week to subsidize a struggling IMAX movie theater owned by powerful developers, while at the same time forcibly closing two profitable liquor stores owned by immigrants. Not only do these actions waste taxpayers' dollars and trample on individual property rights, they also demonstrate how the city is more than willing to play favorites to get what it wants.

Sacramento's IMAX Theater, owned by millionaire developers George and Angelo Tsakopoulos, is located on the east end of K Street, a pedestrian-only downtown plaza surrounded by eateries and high rises. The city of Sacramento has poured millions of taxpayer dollars into K Street to transform it into a swanky downtown hot spot. But after years of subsidizing businesses in the area, K Street still fails to live up to expectations. And the box-office figures at the IMAX prove it.

When the IMAX opened in 1998, the city expected an average of 700,000 tickets sold annually. The city was so confident that the IMAX would help turn the area around that it kicked in $6 million to build the theater and the office tower above it. In reality, the IMAX has averaged just 226,000 moviegoers annually--a figure that fails to provide the theater with enough revenue to cover the yearly rent of $425,000.

Faced with a lack of demand for their product, most business owners, at this point, would accept the will of consumers and close their business. This happens everyday with capitalism: the consumer chooses which businesses survive and fail based on which business provided the best goods or services to the consumer. But the Tsakopoulos brothers aren't your average business owners.

They control a mini-empire in Sacramento, owning many downtown buildings and much of the undeveloped land surrounding the city. They have an estimated net worth of nearly $400 million and have contributed millions to a number of federal, state and local candidates.

Thus, it comes as no surprise that the brothers asked the city for an additional $375,000 over the next five years to keep the theater afloat. In an 8-to-1 vote, the city council complied, citing that "it's not the right time'' for the IMAX to go under, and that the money will go towards "turning K Street around.''

But the city council's generosity stops there. At the same meeting last week the council unanimously approved a plan to seize two profitable businesses from immigrant owners. The reason: too much crime in the area.

Washington and Days markets, owned by Dalip Gupta and Naz Eid, respectively, are located in the Oak Park section of Sacramento, a working-class neighborhood that for too long has been an epicenter of robberies, drug dealing, and prostitution. After a Sacramento Bee report showed many of the neighborhood's crimes occurred near liquor stores, the city council approved a plan to eliminate several of the area's stores, starting with the Washington and Days markets. Using the power of eminent domain, the city will spend $2.6 million to seize the two stores, tear them down, and build houses on the lots.

In undertaking this action, the city fails to acknowledge its own negligence in preventing crime in the area, and uses the storeowners as scapegoats. Instead of using the $2.6 million to better police the neighborhood, the city council chose to use it to remove two successful entrepreneurs from an already economically depressed area. By forcibly removing the stores, the city signals to potential investors interested in improving the area that their money isn't welcome.

In their actions last week, the Sacramento city council rewarded the well connected and quashed the powerless--this in a nation where economic freedom and consumer choice are crucial components of the American dream. When the government picks winners and losers, we all lose.

Anthony P. Archie is public policy fellow in Business & Economic Studies at the Pacific Research Institute. He can be reached via email at aarchie@pacificresearch.org.