Simple answer is YES to both.
Many early RR's were started by a given town that wanted to be the next big thing, or maybe just wanted a connection to the big RR that missed their town.( Redlands, CA ) Since better passenger service was part of the reason, tracks were often built down the street. Some of today's urban railroad trackage was originally built as an Interurban or streetcar line. In other cases the RR found it easier to obtain permission to build down city streets, than to buy right of way from private landowners. Many of these municipal charters had strings attached, often requiring passenger service long after it had become unprofitable to the RR,( Pacific Electric's Santa Monica Air Line is one I know of ) or requiring the RR to remove all track & return the street to it's original condition if they abandon. The Sacramento Northern / Western Pacific / EwePee line in Chico, Ca was one of these. I wonder why EwePee didn't return the streets in Chico back to their original dirt surface ???
It is ironic that many cities, that often owe their early existence to the railroads they grew up around, now complain about "those damn trains running through the middle of town". Reno & Elko, NV. are perfect examples of this attitude.