(a) The board may, without an election, issue refunding bonds in the manner provided by this subchapter to refund outstanding bonds issued by the district.
(b) A refunding bond may be:
(1) sold, with the proceeds of the refunding bond applied to the payment of the bonds to be refunded; or
(2) exchanged wholly or partly for not less than a similar principal amount of the outstanding bonds and the unpaid matured interest on the bonds.