You probably need to click on the little arrows on the right side of the 'Rename' button. They say 'More Options', if you mouse-over them, and should bring up the 'Raze' button, if you click them.
Another possibility to destroy a city is Curgen's Volcano. You need to research Third Book of the Magi in the magic tech tree to unlock it. It costs a lot of mana to cast, but it will destroy the target city and the surrounding area without fail.