(a) The board may, without an election, issue refunding bonds payable from taxes or revenue to refund outstanding indebtedness issued, incurred, or assumed by the district.
(b) A refunding bond may be:
(1) sold, with the proceeds of the refunding bonds applied to the payment of the indebtedness to be refunded; or
(2) exchanged wholly or partly for not less than the principal amount of outstanding indebtedness.