The city of Katy awarded a contract to J.P. Morgan Chase bank for $9 million in flood mitigation bonds at the June 25 regular city council meeting.

Matt Dustin of RBC Capital Markets, the city’s financial advising firm, recommended the sale of the bonds to J.P. Morgan Chase and said the deal offered a low interest rate of 2.906 percent for a 15-year term. Documentation provided by Dustin reflects a payoff date of March of 2033 for the bonds. With interest and fees, the total cost to the city for this portion of the bonds will be just over $11.24 million.

The bonds are part of a $19.5 million bond package for flooding and drainage improvements voters approved May 5.

The first $9 million dollars will go to projects in the Pine Forest subdivision as well as other items in Propositions A and B as included the bond package. Katy Mayor Chuck Brawner said drainage improvements to the Pine Forest subdivision and projects to improve water flow near Patna and Fortuna drives in the Riceland Terrace subdivisions are first priorities.

Brawner said waiting on the bond funds has not delayed drainage projects. The city has been using reserve funds in anticipation of the bond money and will reimburse itself once bond funding is provided by the bank.

“We’re using reserve funds right now for Pine Forest,” Brawner said. “We’ll be [awarding] the contract for Pine Forest on the ninth of next month.”

In other business, the city approved a $6 million sales tax abatement agreement with American Furniture Warehouse. According to city documents, American Furniture Warehouse will open a warehouse showroom store in The Village at Katy, which under development in the northeast corner of I-10 and Pin Oak Road.

The agreement provides for $6 million in sales tax abatements to American Furniture Warehouse over 18 years, according to city documents.

Brawner said under the agreement, the city expects to earn $36 million in sales tax over the next 18 years in addition to property and inventory taxes. The agreement will bring about 350 jobs to the city, Brawner said.

Adequate drainage will be provided in the new development plan and the city will not move forward with any agreements that do not meet the standards outlined in the city’s drainage plan developed by Costello, Inc., Brawner said.

The Katy City Council will meet again 6:30 p.m. July 9 at City Hall.