Small lot residential zoning districts. Requires any locality with a population of 20,000 or more to adopt and maintain a zoning district classification that permits one-family and two-family dwellings and townhouses as a by-right use on lots with a minimum lot area not exceeding 3,000 square feet. The bill requires a locality to apply the zoning district classification to areas within its boundaries in a manner that creates additional capacity for residential development beyond that permitted by right under the zoning district classification previously applicable to such areas.