The grant was announced by trust chief executive Paul Allison last week.
The resource consent hearing into the facility begins on Monday.
Wanaka Hawea Reserves Trust chairman Alan Cutler told the Otago Daily Times in a statement this week he was "extremely concerned and very disappointed'' at the grant.
He did not accept Mr Allison's explanation the money was to allow the project to "take shape'' so it could be "adequately considered''.
"This statement does not bear any close scrutiny,'' Mr Cutler said.
He noted the Wanaka Watersports Facility Trust had promoted the project and lobbied councillors and community board members for well over a year.
"The watersports trust is a small, well-connected and well-resourced group that have had support from architectural and legal services to plan the facility and apply for a resource consent.''
Mr Cutler said its plans and documents for resource consent were submitted late last year.
"The Central Lakes Trust will have known that planning, enabling adequate consideration was completed, and we are astounded that the trust should be giving away public monies on such spurious grounds.''
He noted 71% of public submissions opposed the facility on the site proposed in Roys Bay, near Stoney Creek.
"All the planning information enabling the public to adequately consider the proposal has been completed and the public have spoken.''
He considered Mr Allison's statement the trust did not have "a formal opinion'' on the merits of the project and would not be giving the project any further grants before it was fully approved, rang "very hollow''.
"Does this mean the trust has been able to consider the merits, yet they believe they need to fund the watersports trust planning so the project can be considered on its merits?
"This hardly rings true and it is not the phrasing of an organisation with no opinion.
"An astute, unbiased, publicly responsible and answerable organisation would surely have waited for the decision of the [council] planning commissioners and then considered if it was still appropriate to grant money to the watersports trust.''
Mr Cutler said his trust was not opposed to the facility, but was opposed to the site proposed.
He said the watersports trust and the Central Lakes Trust, "should not attempt to influence a planning process that is well under way''.
"Regardless of whose side one is on with regard to the building, the community has a right to see its money being spent in a wise and appropriate manner.
"We believe this has certainly not been the case here.''
