OAKLAND, Calif. -- The controversy surrounding embattled Oakland Administrator Deborah Edgerly finally prodded Mayor Ron Dellums into action Friday afternoon, as he placed Edgerly on paid administrative leave through her scheduled late July retirement date.

Sources tell KTVU Channel 2 that the reason behind the administrative leave was Edgerly’s refusal to sign over her authority over the Oakland Police Department.

In a letter sent to Edgerly on Friday, Dellums expressed a desire to bring closure to the matter that first surfaced last week when word of the administrator’s alleged interference in the police crackdown against the violent Acorn street gang.

"Yesterday, we collectively agreed that going on administrative leave is in your best interest and the best interest of the city. While I understand you wanted to get back to me by Monday, these matters are too significant to the well-being of Oakland going forward," Dellums' letter to Edgerly read.

Edgerly allegedly attempted to interfere with Oakland police about 10:30 p.m. on June 7 when they towed the car of her nephew, reputed gang member William Lovan, from a spot next to a West Oakland liquor store because he allegedly had a gun inside.

Edgerly and Dellums announced her July 31st retirement date on Tuesday, claiming that her plans to step down from her post had been set in motion in January of this year and that they had nothing to do with the allegations of tampering with the police gang crackdown.

That same day, KTVU Channel 2 has learned that Edgerly may be the focus of federal investigation over information she divulged regarding wiretaps being used to track members of the notorious Acorn gang.

The sources say that police listened in on a phone call between Lovan and Acorn gang leader Marc Anthony Candler a day or two after Edgerly's alleged confrontation with the police. During the call, Lovan reportedly told Candler twice "Get rid of all your mitts. I got this straight from the head." According to sources, the call was a warning that the "mitts" – a code word for phones – were tapped and that the information regarding the wiretaps had come "from the head," who sources believe to be Edgerly.

Edgerly knew about the wiretaps because as city administrator she would have had to approve the huge amounts of officer overtime that the wiretapping would have required during Operation Nutcracker.

Edgerly will remain on leave until July 31, 2008 at which time she will retire from her position at city hall. The mayor has appointed Dan Lindheim as Acting City Administrator effective immediately.

Reacting to Dellums' announcement, City Attorney John Russo said, "Given the circumstances, and given the nature of the allegations confronting Mrs. Edgerly, placing her on administrative leave is the simplest and most legally prudent course for the city to follow."

City Council President Ignacio De La Fuente said he welcomes Dellums' announcement but he thinks "it should have happened last week" after the allegations against her first surfaced."

De La Fuente said, "That would have been in the best interests of both the city and Deborah Edgerly."

De La Fuente said the City Council will meet with Russo to receive a full briefing on matters involving Edgerly. He said he hopes Dellums also will attend.

De La Fuente said he also will introduce at committee meetings next week two items that are prompted by the allegations against Edgerly.

One item is an ordinance aimed at cracking down at nepotism in the hiring of city employees, as Edgerly has many relatives who work for city government.

De La Fuente said the other item is to call for an audit of personnel hiring in the past 18 months.

Former Mayor Jerry Brown hired Edgerly to be Oakland's interim city manager on July 2, 2003, one day after he fired Robert Bobb.

Edgerly later became permanent city manager and then became city administrator in 2004 when the city changed its form of government and that became the top job in the city.

Edgerly told reporters when she was sworn in, "I'm not really interested in the permanent job" as city manager.

Edgerly couldn't be reached for comment Friday.