Though it's not well explained nor prominently displayed in-game, cities have a maximum number of buildable tiles.  It's not something most players come up against in a normal game (though I assume it's attempting to force meaningful choices), the tile cap increases with city level (at least it used to, I haven't payed attention to it recently).  Kind of a vestigial game concept as it's currently implemented.  IIRC, you should be able to see # of available tiles in the individual city summary (click on the city picture when the city is selected).

Hope that helps!