MOULTON — The City Council approved a bond issue Monday that clears the way for demolishing the former National Guard armory and building a fire station.

The bond issue refinances a 2000 bond and gives the town $2 million to build the fire station. The new bond’s interest rate is lower. The old issuance was financed at 4.17 percent, while the new bond is issued at 3.03 percent, meaning it will cost the city $74,746 less in interest during the bond’s 24-year life.

The general obligation bond issue was handled by Raymond James Morgan Keegan in Birmingham.

At a previous meeting, Moulton Mayor Ray Alexander said original plans to convert the old armory into a fire station were scrapped after the architect said it would cost more to convert the old building than to build a new fire station.

The money from the bond issue will be combined with a grant of $375,000 for construction. Alexander said he is optimistic that all $2 million will not be needed for the fire station and that leftover funds can be used for other city projects.

The city purchased the former armory for $75,000 after the National Guard closed it and 13 other Guard facilities to save the state about $7 million in renovation costs and $250,000 annually.

Moulton firefighters have slept in a Federal Emergency Management Agency trailer behind the current fire station since the April 27, 2011, tornado outbreak caused flooding and mold.