Cal. Water Code § 36447.12

In lieu of refunding outstanding bonds by defeasing or calling for redemption, the board may also refund under Article 6 (commencing with Section 36060) of Chapter 2 by purchasing the bonds to be refunded with proceeds of the refunding bonds or by acquiring the bonds to be refunded and exchanging them for the refunding bonds, in either case in a negotiated transaction with the bondholder or through an intermediary agent of the district.