Just to make this clear from the start- this is about a minor race city that was captured by one of the 'real' AIs. I know that minor races aren't supposed to expand their cities.

Now, minor race cities are special in that they can't go past level 1. However the AI doesn't seem to realise this, and it had build a whole load of houses which were doing nothing other than wasting their food resource. Seems to me this is a pretty nasty glitch since food is probably the most precious resource in the game so the AI had basically crippled itself.