@JayHawkFanToo No they couldn't because it was going to be a joint ownership between the city and university like Erwin Center. The site they wanted was the old headquarters for the Austin American Statesman. I don't think using eminant domain on the city newspaper would be the smartest idea in the world for a local government.
The biggest reason a deal was never made with any land site was the apathy towards the basketball program which has been in place long before Shaka Smart went there. Even when Rick Barnes had UT at their peak in the mid 2000's, they only ever sold out when it was KU, UNC, or Kentucky coming to town and those fans bought up the tickets.