That folder hasn't been updated for over a year on my machine (didn't use notes until El Cap) and it's size is below 1k, so I'm guessing it's no longer used. Also, in the El Cap preview, they said it would use a new file system for iCloud, which may mean a different location.
I am not a Time Machine user (know too many who have had problems). I use Carbon Copy Cloner, which is great, if you know where files are stored and how to make them visible (Im sure I'm backing up, but I am not clear on how to selectively restore, if necessary).