Joe Guillen

Detroit Free Press

The city of Detroit's chief financial officer and his chief of staff each rent high-end apartments in downtown Detroit, take weekly flights to Washington, D.C., and Chicago and use Uber to ride around town, and are reimbursed by the city, the Free Press has learned.

Expense reports indicate Detroit CFO John Hill and his chief of staff, John Hageman — who earn salaries of $225,000 and $130,044, respectively — have their living expenses in Detroit covered while they maintain addresses elsewhere.

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The ample expense allowances for Hill and Hageman, which include a $54 per diem for workdays, are in line with terms of recently revealed contracts for CFO consultants Larry A. King and Dexter Lockamy. Hill, who hired King and Lockamy, both former colleagues of his in Washington, previously defended the consultants' contracts as appropriate for their skill set.

Hill's expense reports for costs incurred between March and August show he was reimbursed for:

Rent payments at the Fort Shelby Tower Apartments between $4,060 and $4,231 a month, totaling $24,941.

Weekly flights to and from Washington for a total of $10,621. An address for Hill in Washington is listed on the reports.

Uber rides and other methods of ground transportation to airports and work events that cost $1,987.

Per diem allowances totaling $5,886.

Hageman's expense reports for costs between February and July show:

Monthly rent payments of $2,312 at Fort Shelby totaling $13,872.

Furniture rental of $735 per month.

Bills for cable TV, Internet and DTE Energy totaling $648.

Thirty flights, mostly to and from Chicago, for $7,762. Hageman's reports list an address in Evanston, Ill.

Ground transportation to airports and work events costing $3,048.

Per diem allowances totaling $6,153.

Although the expense reports show that city funds were used for the reimbursements, Hill said a grant to former emergency manager Kevyn Orr from a private foundation covered a majority of his and Hageman's expenses. When asked on Saturday to identify the grant funds used to offset his and Hageman's expenses, Hill wrote in a text that those details would be available today.

In an e-mail to the Free Press on Friday evening, Hill explained that his expenses are in line with the contract he signed with Orr when he was hired in November 2013. Hageman also was originally a contractor with the city before Hill appointed him his chief of staff in May 2015. Both Hill and Hageman are now city employees under a new job status known as "administrative special services."

"While John Hageman and I are both city employees, it is under a different arrangement," Hill wrote in his e-mail. "Both of us had pre-existing negotiated contracts for our work. The conditions of those contracts are still in effect under our new status. While the contracts included expenses such as travel and lodging, neither of us receive a city benefits package, which typically adds about 40% additional cost.

"I negotiated the terms of John Hageman's contract to be similar to his previous with a consultant firm, from which I recruited him. His expenses are comparable to my own in how they are structured. The difference in the cost of our lodging is that mine is based on a higher 'all inclusive' rate. That rate was not available to John Hageman at the time he entered into his contract. As a result, he has a lower monthly base rate, but items that are included in my cost must be billed separately under his arrangement.

"The grant funds used for the majority of these expenses came from a private foundation that provided these funds for expenses of the OCFO."

During his first year on the job as Detroit’s emergency manager, Orr stayed in a $4,200-per-month condo in the Westin Book Cadillac. Gov. Rick Snyder’s NERD Fund, which stood for New Energy to Reinvent and Diversify Fund, paid the rental bill, the Free Press reported in September 2013. Snyder announced the fund would shut down later that year.

Mayor Mike Duggan's office declined to comment on the expenses of Hill and Hageman.

Hill is a certified public accountant specializing in municipal finance. Formerly, he was CEO of the Washington, D.C., civic group Federal City Council. Hill also previously served as executive director of the D.C. Financial Control Board, which the federal government installed in 1995-2001 to take over operations of that city’s government as it faced a deficit of more than $700 million.

Duggan later appointed him as chief financial officer and Hill was confirmed in early 2015 by the City Council and the Detroit Financial Review Commission, the post-bankruptcy state oversight panel. Under state law, any effort to remove Hill as Detroit's CFO is subject to the commission's approval.

Under Hill's leadership, Detroit has maintained compliance with its exit from municipal bankruptcy. The city has posted surpluses in recent years on the city's annual budget of roughly $1 billion, and the Duggan administration also projects a balanced budget for 2016-17. If the city stays within budget, and an audit is certified in 2018, Detroit could end a period of direct oversight and go into a period when the state's Financial Review Commission would be mostly dormant.

Despite those advances, the Detroit City Council has pressed Hill in recent weeks to be more transparent about how he runs his office. Hill signed the contracts with King and Lockamy without the council's approval under authority granted to him by Orr. Hill agreed to end that practice in a letter to the council in December 2015.

The council, caught off guard by news reports about King and Lockamy's contracts, has requested a list of all consultants in the CFO's office that make at least $100,000. Hill told council members last week that he would supply that list by Friday. As of that night, the list had not been provided to the council, according to Stephen Grady, chief of staff to council President Brenda Jones.

Jones renewed her call for transparency in the CFO's office during a council meeting that Hill attended Oct. 4.

"The people have a right to know what the government's money is being spent on and who it's being spent on and how much is being spent," Jones said at the meeting.

Multiple council members could not be reached for comment Friday evening.

Contact Joe Guillen: 313-222-6678 or jguillen@freepress.com. Follow him on Twitter @joeguillen.