The Detroit Land Bank Authority spent more than half a million dollars in legal expenses amid a wide-ranging federal probe of the city’s demolition program, according to records obtained by the Free Press.

The newspaper's analysis of legal invoices, obtained under the Michigan Freedom of Information Act, found that the Land Bank paid $537,414 to two high-powered firms — WilmerHale and Miller Canfield — for legal representation since June 29, 2016. The legal counsel was for the Land Bank, as well as two other entities: the City of Detroit and the Detroit Building Authority.

The Free Press spent more than 10 months pursuing the invoices — filing a handful of open records requests and encountering delays from the Land Bank. The agency at one point charged more than $4,000 to produce the public documents, before reducing the price after delays in providing the records.

Officials claimed no public money would be spent, but legal bills cost city

The invoices cover work related to the federal probe up until April 8. At least 10 monthly invoices reviewed were billings of $20,000 or more, with the largest amount paid — $44,073 — going to Miller Canfield in July 2016.

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The Free Press confirmed that a portion of the legal expenses were paid for using city dollars, despite officials at one point in 2016, saying that no city money would be allocated for legal bills connected to the probe. The exact amount of city dollars used is unclear because Land Bank and Detroit officials did not directly answer a question seeking clarification on how the expenses were covered.

However, the Land Bank defended the amount it paid in legal fees thus far, saying that "the top priority is to make sure we comply fully with the investigation."

"Retaining outside counsel with the necessary capacity and expertise allowed us to fully comply while maintaining the ability to move forward with the demolition program," Land Bank spokeswoman Alyssa Strickland said in a statement to the Free Press.

The building authority and land bank jointly manage and oversee the city’s demolition efforts. The beleaguered program, which has billed itself as the nation’s largest and most transparent, has faced intense scrutiny in recent years for its practices and the highly publicized federal probe.

The program has been fueled by more than $250 million in Hardest Hit Fund dollars from the U.S. Department of Treasury and has been a cornerstone of Mayor Mike Duggan's administration since he began his aggressive blight remediation effort in 2014.

The federal investigation resulted in criminal charges in April against two former employees of a demolition firm, one of whom worked for the city of Detroit at some point.

Hundreds of pages reviewed by the Free Press provide a small glimpse into the shrouded investigation, revealing dozens of instances of attorneys communicating, responding and analyzing requests from the federal government and agents. Attorneys also spent a good amount of time producing documents and participating in several conference calls with “government counsel.”

A lead Miller Canfield attorney, Thomas Cranmer, charged the Land Bank fees that included 49.68 miles of mileage incurred for “travel and attendance at meeting with government agents” in late 2016.

Cranmer traveled to attend a meeting with government attorneys in Feb. 2017. Miller Canfield also at various points provided counsel for an unnamed “witness in the government investigation,” although Land Bank spokeswoman Alyssa Strickland said the firms don't represent individual employees or leadership.

While some tidbits of information could be gleaned from the documents, it was nearly impossible to determine the extent of legal services provided to the entities because many of the invoice descriptions were heavily redacted by Land Bank attorneys who responded to the Free Press inquiry. As an example, in the May 10, 2018 invoice for services rendered through April 30 by Miller Canfield, there are 17 redacted descriptions of work being performed by attorneys. At least five of these instances were completely blacked out.

In an Oct. 11, 2016 invoice from Miller Canfield, the entire page was blacked out aside from the total balance, including an outstanding amount, of $13,732.76 and a timekeeper’s summary.

The Land Bank's legal team said in its release note that it redacted certain information from the documents, including financial information and other items it decided it could legally obscure.

"The DLBA withheld portions of these documents under MCL §15.243(1)(g) and (h) which exempts, 'records subject to the attorney-client privilege' from disclosure," the legal team stated. "Specifically, the information constitutes confidential communications between WilmerHale and/or Miller Canfield attorneys and DLBA clients related to legal matters for which the client sought legal assistance and services. It also includes legal opinion, strategies, and attorney work-product by attorneys to their clients."

The Land Bank charged $92.50 an hour (inclusive of fringe benefits) last year for “the lowest paid DLBA employee who is capable of performing the task of reviewing the documents."

The Free Press through its attorney initially challenged the redactions and cost amount of the open records request last August.

"The concept behind the FOIA is accountability," Free Press attorney Herschel Fink wrote in the newspaper's Aug. 30 appeal. "The law’s purpose is to make government, and the conduct and actions of its officials and employees, accountable through transparency."

The Land Bank declined to outright disclose a total dollar amount of how much it spent on legal services. The Free Press subsequently paid more than $2,000 to obtain the records in late May.

"The Detroit Land Bank Authority operates with the greatest transparency, and we’ve complied fully with FOIA law in processing your request," Strickland said in February.

It's not clear where the federal investigation stands.

When asked whether the Land Bank is continuing to cooperate with the investigation, Strickland said, "federal investigators have not reached out to the DLBA regarding this matter in 2019."

"We have cooperated fully since the outset of the investigations and will continue to do so if called upon," Strickland said, before later pointing to a statement released by the U.S. Attorney’s Office in April, which indicated that the government “as of today's date, does not anticipate charging any additional public officials."

The lead investigating agency in the probe, the Office of the Special Inspector General for the Troubled Asset Relief Program, declined comment for this article, saying its comments on the case "remain limited" to its recent news release.

The local FBI office, which has assisted with the investigation, also declined comment.

The Free Press previously reported that the probe was layered and touched on several different facets of the program, including dirt usage, alleged improper billing and a scheme where a company tore down homes and hid the debris under layers of dirt.

Costly attorneys

The Detroit Land Bank Authority hired the Washington-based firm WilmerHale, as well as Miller Canfield, which has offices in Detroit, in May 2016, shortly after the FBI confirmed it was assisting in the blight demolition investigation.

While some of the work was performed by attorneys who were paid hourly rates as low as $75 an hour, others charged the Land Bank much more, at times for simple tasks such as receiving and reviewing voice mail messages and hosting conference calls with "the client."

Miller Canfield's attorney Cranmer, who early on charged $300 an hour in 2016, later began charging $515 per hour in July 2017, according to the documents.

Former WilmerHale attorney Jeannie Rhee had an hourly rate of $950 and another, Brent Gurney, $1,145.

But Strickland noted the Land Bank received a negotiated 20% discount on legal fees from WilmerHale, which reduced those attorney rates.

"You will also note that attorneys with the highest rates of pay were utilized as specialists, primarily for terms less than one hour, meaning they would not have received that full rate," Strickland said. "The attorneys doing the bulk of the work, were those with lesser hourly rates."

Where did the money come from?

Although both law firms also represented the city of Detroit, Duggan spokesman John Roach told the Free Press in 2016 that the Detroit City Council did not have to approve the hiring because there was no city money involved.

But Council President Brenda Jones expressed concerns in a memo to former corporation counsel Butch Hollowell about the hiring of the two firms in May 2016.

Jones questioned why the contracts weren't sent to council for approval and what funds were utilized to compensate the firms for their legal services.

In response, Hollowell wrote: "These contracts are Land Bank contracts approved by the Land Bank board. The city is not paying for these legal services, though it will receive advice and counsel."

But the Land Bank in February and last week confirmed city dollars were used to cover the defense costs.

"Legal fees are paid out of our general operating fund, which comes from a variety of sources including city funding," Strickland said in February. "Hardest Hit Fund dollars are kept in a separate account and are not used to pay legal fees. ... The use of city funds for legal fees is consistent with our defense agreement with the City."

Neither the city nor the Land Bank responded directly to a question asking how much of the half million in expenses was covered by city dollars.

The city also did not directly answer questions about when or why the decision was made to use city dollars to cover the legal fees. The city also did not respond to a question asking whether council was ever informed that city dollars would be used for this specific expense and exactly how much money is appropriated to the Land Bank beyond its $20 million advance fund.

Instead, Roach said Thursday via email: "All such appropriations from the city are approved by City Council."

City council members reached for comment declined or did not respond.

What's next for demolitions in Detroit?

Mayor Duggan announced Thursday at the Mackinac Policy Conference a plan to ask voters in 2020 for a $200 million bond that will be used to take down the city's remaining blighted homes.

The announcement is Duggan's latest ambitious proclamation in his effort to fight the blight that remains across large swaths of the city.

“By 2024, we won’t have a single abandoned house in Detroit,” Duggan said, adding that 18,000 blighted structures remain.

But it isn't the first time the mayor has laid out such plans.

During his 2017 State of the City address, Duggan said the city would demolish 10,000 abandoned homes in the next two years, leaving about 10,000 abandoned properties by the end of 2018.

The city did not meet that goal.

And in his 2018 address, he pledged to have every abandoned home in the city either demolished, renovated or boarded by the end of 2019.

It's unclear how the city plans to meet the new, aggressive goal but council is expected to be asked to consider it in September before it can go on the ballot.

The federal Hardest Hit Funds will be exhausted by early next year and oversight of the demolition program will shift away from the Land Bank to being fully administered by the city.

According to the city's online data portal, 17,917 Detroit homes have been torn down since 2014. Of that, 13,263 were torn down using some of the more than $200 million federal dollars allocated to the city. The remaining were paid for using city dollars.

Duggan earlier this year allocated $50 million in his 2020 budget to go toward blight removal.

Free Press staff writer Joe Guillen contributed to this report.