What do your governing docs say about the use of the party room? The fee could be used for clean-up costs, or maintenance of the room (painting, furniture, etc). Is the fee reasonable? is any portion of the fee refundable? It's not uncommon for condo associations to charge a fee for the use of the party room as there's always a cost involved in its upkeep. It could also just be a source of revenue for the association. Does the fee go to the reserve account? or operating account.

And our condo charges a fee to use the laundry room. Just as washers and dryers use additional water and electricity, thereby increasing our bills, so too does using the community room cost your HOA money: lights, wear and tear on the furniture and floors, etc. Charging a fee keeps the few bad apples from letting their friends hold parties there.

We do not charge a fee but could if we wanted to, there's nothing in our governing docs that says we can't. Anyone that wants to use it signs up on the calendar to reserve date and time and is expected to leave it in better condition than they found it, though users are not expected to dust, vacuum or mop. It works for us.

Our Condo chargesa fee to use the comunity center for various functions. Fee is about $25.00. It covers increased cost of electricity, heat, cleanup etc. We do not make a profit on it.

Our laundries are coin operated and the money accounted for separately. We do not prorate for electric and water and then transfer some portion of funds from the laundry account to the operating account to pay for the common water and electric bills. We have nine five-year-old washers and nine dryers - don't know how old - and $18,000 in our laundry account, so we can fund repairs and replacements. Laundry income budget is $5,000 per year.

Our community room is attached to the pool. We do charge a small fee $50.00 to hold a party. The fee goes into the operating budget to off set: supplies (toilet paper etc.), cleaning, phone, electricity etc. We find the same folks use it over and over again. They don't seem to mind - but we are located in an area where renting a facility of that size would be very expensive - so the $50.00 is not that much.

Raffaella Caputi was spot on. 
 
As to their authority to charge, it depends on governing documents. 
 
As to why, I am sure that because of some bad experiences with prior users of the community party room associated with cleanup or damage costs had something to do with it. It just takes one owner to ruin it for everyone. 
 
Perhaps a better solution for you to suggest is to have them charge a deposit fee, refundable only if cleanup and repairs are not necessary. Of course some type of written contract needs to be signed with the conditions clearly spelled out.

You speak of your Association Manager and Board as if they were your Land Lord. I presume you OWN your condo. 
I suggest you take an active interest in the management and activities of your Manager and Board. That way you will know why things are done the way they are. If you don't agree, change them. Most Associations have an election of officers every year. Be ACTIVE. Volunteer for service rather than complain.  
Too few owners are willing to take an interest and serve.