We report the bulk properties and ab initio thermodynamics surface free energies for α-Fe₂O₃(0001) using density functional theory (DFT) with calculated Hubbard U values for chemically distinct surface Fe atoms. There are strong electron correlation effects in hematite that are not well-described by standard DFT. A better description can be achieved by using a DFT + U approach in which U represents a Hubbard on-site Coulomb repulsion term. While DFT + U calculations result in improved predictions of the bulk hematite band gap, surface free energies using DFT + U total energies result in surface structure predictions that are at odds with most experimental results. Specifically, DFT + U predictions stabilize a ferryl termination relative to an oxygen termination that is widely reported under a range of experimental conditions. We explore whether treating chemically distinct surface Fe atoms with different U values can lead to improved bulk and surface predictions. We use a linear response technique to derive specific U^d values for all Fe atoms in several slab geometries. We go on to add a Coulomb correction, U^p, to better describe the hybridization between the Fe d and oxygen p orbitals, accurately predicting the structural and electronic properties of bulk hematite. Our results show that the site-specific U^d is a key factor in obtaining theoretical results for surface stability that are congruent with the experimental literature results of α-Fe₂O₃(0001) surface structure. Finally, we use a model surface reaction to trace how the various DFT + U methods affect the surface electronic structure and heterogeneous reactivity.