; and (ii) with respect to participants who are at least 16 years old and no older than 24 years old, the expected levels of performance for each of the indicators of performance under section 116(b)(2)(A)(ii) for the activities carried out under the project under this section, which shall meet the requirements of subparagraph (B). (B) 5th year Each of the expected levels of performance established for each of the indicators of performance under clauses (i) and (ii) of section 116(b)(2)(A) pursuant to subparagraph (A) for the 5th year of the demonstration period shall be higher than— (i) the highest level of performance for the corresponding indicator of performance for the programs described in subparagraphs (A) and (C) of section 3(13) for the most recent program year that ended prior to the beginning of the first year of the demonstration period; or (ii) an alternate baseline level of performance that is agreed upon between the State, local area, or consortium, and the Secretary— (I) prior to the Secretary’s approval of the application submitted under subsection (d); and (II) after the Secretary takes into account— (aa) the goals the State, local area, or consortium intends to achieve through the demonstration project; and (bb) the participants the State, local area, or consortium intends to serve under such project. (2) Sanctions (A) In general The sanctions described in section 116(f)(1)(B) shall apply to a State, local area, or consortium beginning on the 3rd year of the demonstration period for such State, local area, or consortium, except that the levels of performance established under subsection (f)(1) of this section shall be— (i) deemed to be the State negotiated levels of performance for purposes of this paragraph