STONEHAM, Mass. -- Stoneham Town Meeting members voted Monday to end a 25-year arrangement that allowed a small group of businesses to use town land at no cost, an arrangement that Massachusetts Inspector General Gregory Sullivan called a "sweetheart deal."

Team 5 Investigate discovered 11 parcels of land along former rail lines had been turned into parking lots, private driveways and dump sites for abutting businesses.

"They filled in the land here," said Charles Smith, a former Stoneham Selectman, as he toured one site with Team 5 Investigates reporter Janet Wu. "They paved it over for access to this building."

Smith said the fence blocking access beyond the driveway also is public property, land that is part of a state plan to build a bike path through Stoneham, Woburn and Winchester.

One abutter, Michael Murphy, of Montvale Plaza owner, said he had never been notified by the town to pay for the cost of parking his vehicle on the property.

"I didn't know that we had to," said Murphy.

"They're getting free land for nothing," responded Smith. "It frustrates me. Times are tough for everybody. I wish I could get free land from the town, city, state."

The land originally belonged to the MBTA. In 1984, it began selling or leasing parcels to the town for little to no money. But the deal clearly stipulated if Stoneham received any revenue from the use of any property, that money would go back to the MBTA.

For about a decade, owners of five parcels paid a dollar a year. When the leases lapsed, all payments ceased.

"They acquired this land and never had any intention of using it for public purpose," said Cameron Bain, of the New Bike Path Committee which has been fighting the town over this issue for nearly two decades.

Gregory Sullivan, Massachusetts Inspector General, agreed.

"It was a no-bid, sweetheart arrangement that's been allowed to go on. We brought it to the attention of the community five years ago," said Sullivan. "They said they would correct it and basically its been allowed to continue."

Stoneham Town Administrator David Ragucci denied there were any sweetheart deals. But until Monday night the town never asked the businesses to pay and the owners broke no laws.

"There are small businesses in this economy who need the help of communities like Stoneham, said Ragucci.

Asked if these businesses were receiving a special deal because of who they know, Ragucci said "not in my eyes."

Sullivan said he believed the arrangement violated state law.

"They've given permission and authority for private businesses to operate on public land at no compensation. This is against the law. It is unconstitutional," said Sullivan.

"We could certainly kick them off or we could go lease it but there is no gain for the taxpayer of Stoneham," said Ragucci. "It would go back to the pockets of the MBTA, not necessarily to the taxpayers of Stoneham."

"The town manager is taking a very cynical view," responded Sullivan. "The T is hemorrhaging money. The taxpayers are going to have to bail out the T with this same money."

The inspector general estimated the loss of revenue to taxpayers has been hundreds of thousands of dollars over the past 25 years. Sullivan also said the cost of cleaning up the property to begin building a bike path by 2013 will cost even more.

The inspector general is now demanding local businesses make reparations to help pay for the cost of clearing the land, the parking lots and roadways.

But town officials were ignoring his call until the Town Meeting vote Monday.

"These public officials are supposed to protect the interests of the taxpayers. In this case, the taxpayer has taken the hit," said Sullivan.

But bike path advocates said the biggest victims were youngsters desperate for a bike path.

Among the children who ride their bikes daily in parking lots in Stoneham is Adan Hernandez, who said he routinely dodges cars.

"I was riding in a parking lot and they backed up and my wheel went into the front bumper," said Hernandez.