Scrub potatoes; cook in boiling water about 30 minutes or until tender.
Drain and cool slightly; peel and cut into1/4 inch slices.
Melt butter in a heavy saucepan over low heat; add flour, stirring until smooth.
Cook 1 minute, stirring constantly.
Gradually add milk; cook over medium heat, stirring constantly, until thickened and bubbly.
Add cheese, stirring until cheese melts and sauce is smooth.
Layer half of potatoes, green pepper, and pimiento in a lightly greased 1 1/2 quart casserole.
Repeat with remaining ingredients.
Pour cheese sauce over potatoes.
Bake, uncovered, at 350Â° for 40 to 45 minutes.