East Hampton Town officials came under fire Monday night for what one Montauk man called “a sweetheart deal” for an establishment that many see as a nuisance.

Richard Valcich was referring to the Surf Lodge and the lease the town has drawn up with the hotel, restaurant and nightclub to use the Montauk Playhouse for parking on the weekends. The agreement comes with a $5,000 fee and a September expiration date and was unanimously approved by the board, with the exception of Councilwoman Julia Prince, who is on leave. Though the deal is all but done, the actual agreement has yet to be signed, said Councilwoman Theresa Quigley.

Ms. Quigley and Supervisor Bill Wilkinson faced a deluge of criticism when they attended the Montauk Citizens Advisory Committee on Monday night. CAC members and other residents told them they thought the town should not be accommodating to an establishment that has a history of violations. Furthermore, they said the town did not get enough money for the deal.

“We’re trying to address a very specific problem,” Ms. Quigley said. “We thought we solved the parking problem. We didn’t intend to create new problems.”

Mr. Wilkinson said the catalyst for the agreement was a busy Memorial Day weekend at the Surf Lodge when safety issues caused by a parking situation in which clubgoers leave their cars parked illegally along the roadside, were glaringly obvious. He said when there was a fire on Industrial Road that weekend, a fire truck and ambulance were rerouted around Fort Pond because they could not get through the crowded side streets with cars parked on both sides of Edgemere and Industrial roads.

Mr. Wilkinson said parking restrictions around the Surf Lodge were rarely enforced. In addition to the lease agreement for the Playhouse property, the town said it would extend the no-parking zone to include all housefronts on South Industrial Road and has hired four temporary officers to patrol the area and enforce parking regulations. In addition, the Surf Lodge has hired an additional security guard and will hire a shuttle to bring people from the Playhouse to the establishment.

“This was not done to make money, it was done to mitigate the traffic issue and improve safety,” Mr. Wilkinson said. “We were very fortunate not to have a catastrophe Memorial Day weekend.”

Though many at the meeting, business owners especially, thought the practice was unfair, they also said that if the town was going to sign such an agreement it should have been more lucrative.

“We could have easily gotten $50,000 from them in one weekend,” said CAC Chairwoman Lisa Grenci. “We don’t have a problem with these guys coming in here, we have a problem that they are getting a break when the local people would not have such an easy time getting that parking.”

Ms. Grenci added that community members suffer because of the huge crowds and noise at the Surf Lodge, and said the CAC has been trying to work with Surf Lodge owner Jamie Mulholland to get him to bring the establishment into compliance after it received numerous town code violations, many for noise and septic issues. Many community members have expressed concern that septic flow from the Surf Lodge would pollute Fort Pond.

Mr. Wilkinson said he did not see the two issues as being connected and said he did not feel comfortable bargaining one for the other. And according to Ms. Quigley, who said she spoke to the town fire marshal on Monday, the Surf Lodge has a much higher legal occupancy than many thought.

Chief Fire Marshal Mike Johnson said the interior and the deck can accommodate 134 and 130 people, respectively, and the beach area outside the building has no occupancy restrictions.

“People are upset because you are accommodating an operation that has become a public nuisance,” said James Ketchum. “You say you’re concerned about public safety when you have the legal mechanism to close the place down. If you’re sincere in your concern, close the place down.”

Diane Hausman, a member of the CAC and the Montauk Playhouse Community Center Foundation, said she was disappointed that the foundation had never been consulted about the decision to use the property, which is owned by the town.

“At no time did we ever come to an agreement,” she said. “We feel a total lack of respect from the entire Town Board that none of you—with the exception of Julia who was not there to vote—paid attention to any of us.”

Ms. Grenci also suggested the board might have held a public hearing over the issue to gauge community concerns.

“We regulated,” Mr. Wilkinson said. “That’s what we do. Not everything is for public hearing.”

Tom Grenci, a town police officer and member of the Montauk Fire Department, supported the decision and said it is a much needed and drastic improvement.

“I was on that call,” he said about the Memorial Day fire. “Something had to be done and I think something intelligent was done to control that traffic.”