The reality is that anyone who enters into a building project of the magnitude clearly shown by the pictures on the web site needs to at least look into the building codes/permitting process. The guy who built this cool railroad is not without fault. Ignorance of the law simply is not an excuse, railroad or no railroad. Building codes and permits are a fact of life in most jurisdictions these days, for good reason.
And whoever discovered what was done without permits is doing his or her job. The law is the law.
All that being said, hopefully the governing body will act with wisdom, since it is an unique case and probably evolved in small increments over time. Perhaps an appropriate penalty would be to offer free weekend rides to all the county school kids for a year.
JBWX