Boil carrots until cooked, about 20 minutes. Drain and mash with 1/4 cup butter. Saute pepper and onion in melted butter, about 5 minutes. Stir in flour and milk. Cook over medium heat for about 3 minutes or until mixture is consistency of gravy. Mix with mashed carrots. Place in casserole dish. Bake at 325 degrees for at least 45 minutes.