I believe that I can rehab this place for 30K.If I’m right, I can flip it for 35K profit, or buy and hold for an ultimate cash on cash between 10 and 15 cap.What are the environmental risks involved with railroad sidetracks (I’m thinking repair and refueling, possibly herbicides or cargo)?

There is probaby something you are overlooking...environmental waste issues with the property...city plans to take the house under eminent domain...something.

Certainly will need sufficient staff to help him understand the problem so that possible solutions can be modeled and an environmental impact study can be performed.

In addition to the deposit, I have spent ~$20,000 to acquire the property including inspections, phase 1 environmental, bank fees, attorney fees, etc.

Have you completed an environmental around the property??

Additional items required at this stage include a project description including amenities, preliminary site, building and unit plans; rough, estimated project costs; and environmental reports.

Environmental compliance?

There are going to be some obvious and not so obvious problems, especially in the environmental area. 3)If you are serious, get someone out there that does fire restoration construction.

Done right, a grow op can be done with a small environmental footprint, but as @John D. points out, there are structural limitations to the house that might not allow best practices, in which case a lot of harm can be done.  

The state Department of Environmental Quality and the Oregon Health Authority plan to announce that DEQ data indicate a monthly average of 49 times the state air-safety benchmark level for the neurotoxin and carcinogen cadmium, and 159 times DEQ's air-safety goal for the carcinogen arsenic."