I needed to define some fonts for the fontfamily object to get the tags to work
//Building font objects and FontFamily object.
TrueTypeFont verdanaRegularFont = new TrueTypeFont("verdana.TTF");
TrueTypeFont verdanaBoldFont = new TrueTypeFont("verdanab.TTF");
TrueTypeFont verdanaBoldItalicFont = new TrueTypeFont("verdanaz.TTF");
TrueTypeFont verdanaItalicFont = new TrueTypeFont("verdanai.TTF");
FontFamily verdanaFontFamily = new FontFamily("VerdanaFontFamily", verdanaRegularFont, verdanaBoldFont, verdanaItalicFont, verdanaBoldItalicFont);
FormattedTextAreaStyle style = new FormattedTextAreaStyle(verdanaFontFamily, fontSize, true);
FormattedTextArea textArea = new FormattedTextArea(HttpUtility.HtmlDecode(text), x * mmToPoints, y * mmToPoints, w * mmToPoints, h * mmToPoints, style);