Preheat oven to 400°F. Butter a 9x13 casserole dish.

Sauté onion and garlic in olive oil until translucent.

Layer half of the potatoes in bottom of casserole dish. Sprinkle with salt & pepper. Top with onion/garlic mixture, and add the remaining potatoes. Season with salt and pepper.

In medium saucepan, melt butter over medium heat. Mix in flour and salt, stir constantly with whisk for 1 minute. Stir in milk. Cook until mixture has thickened. Stir in cheese all at once, and continue stirring until melted, about 30-60 seconds. Pour cheese over the potatoes. Cover with aluminum foil.

Bake 1 hour in preheated oven.