San Diego Mayor Dick Murphy (search) resigned Monday in the face of criticism that he failed to lead California's second-biggest city out of a widening federal investigation of City Hall.

"It's clear to me that the city needs a fresh start," Murphy said, announcing he will leave office on July 15. He said he anticipated a special election on Nov. 8 to select his replacement.

Last week, Murphy was called one of the country's three-worst big-city mayors by Time magazine, which said the mayor was "discredited" by the city's pension fund crisis.

San Diego's pension system has a nearly $1.4 billion deficit and is at the heart of investigations by the Securities and Exchange Commission (search), the U.S. attorney and FBI into city finances, possible public corruption and securities fraud.

Murphy, a former judge who has served 4½ years as mayor, held back emotion as he made the announcement Monday morning at City Hall, surrounded by his staff and family.

In the November election, the mayor won re-election by 2,108 votes, narrowly beating a maverick city councilwoman who waged a surprisingly strong write-in campaign. Supporters of Councilwoman Donna Frye (search) contended more votes were cast for her, but thousands of the write-in ballots were disqualified under a state law. Following a series of legal challenges, Murphy was sworn into office on Dec. 8.

In announcing his resignation, Murphy made reference to a change in government that was approved by voters last fall to give the mayor greater power. Currently, the city manager wields control over city functions.

"I now believe to be effective the city will need a mayor who was elected by a majority of the people and who has a clear mandate to take this city forward," he said.

Murphy has publicly clashed with the newly elected city attorney, Michael Aguirre, who has called for the mayor's resignation and issued a scathing report that found he and the City Council violated federal securities laws by hiding key information about city finances.