(a) Refunding bonds of the district may be issued to refund an outstanding indebtedness the district has issued or assumed.
(b) The bonds must be issued in the manner provided by Subchapter D, Chapter 1207, Government Code.

(c) The refunding bonds may be sold and the proceeds applied to the payment of outstanding indebtedness or may be exchanged in whole or in part for not less than a similar principal amount of outstanding indebtedness. If the refunding bonds are to be sold and the proceeds applied to the payment of outstanding indebtedness, the refunding bonds must be issued and payments made in the manner provided by Subchapters A-C, Chapter 1207, Government Code.