There was no water anywhere as I started with a completely white waterd.bmp. As I said, after painting the tile with a different texture than what I had, fixed the issue. Yes, there is still a border around the city-strat where no clutter or road will show. I stop my roads just on the edge so you can see the depot and then I increase the radius if needed to allow it to supply the one nearest strat.
If you look at the screenshot I posted, the empty poly is one little triangle in the corner of the 1-mile terrain square. And if you look close, that same exact triangle is empty in three other squares, which leads me to believe there is a texture-mixing combo that causes this issue.