The Arcane Academy has no resource cost and actually has a 0 on space it takes up. In later games in cities that are completely surrounded with no more spaces I've been able to lay down Arcane Academies. But when they are placed on the map they seem to attach to other cities and all stack in the same place.

It's a very fickle bug that's hard to reproduce when placing Academies in cities with no room. Sometimes it does it other times it won't. If I track down more on that part of bug I'll add it here. If anyone else wants to experiment I'll post my save file.

Save: http://dl.dropbox.com/u/6399047/ArcaneAcademy.EleSav