even though it's at the maximum moment, the reduced section still might be acceptable, no ? if you've done the sums and the reduced section is down, then you need to reinforce it. you've got something like 9" of flange remaining (and a 3" cut-out) ... i'd suggest a strap about 9" wide and 1/2 as thick as the original flange (so you're adding a bit more material).
corners of the notch should have a nice radius, something like 1" even if it makes the notch longer ('cause they've been cut sharp).
reinforcing with a welded plate that's longer than the notch does relieve the stress concentration at the notch