(a) District refunding bonds may, without an election, be issued to refund any bonds or other refundable indebtedness issued or assumed by the district.
(b) A refunding bond may be:
(1) sold, with the proceeds of the refunding bond applied to the payment of the outstanding bonds or other refundable indebtedness; or
(2) exchanged wholly or partly for not less than a similar principal amount of the outstanding bonds or other refundable indebtedness.