Preheat oven to 350° F. To make Sauce: melt butter in sauce pan. Add diced red pepper and fresh minced garlic; cook gently until red pepper is tender. Stir in flour, milk, salt, black pepper, basil, oregano and sugar. Heat and stir until sauce starts to thicken. Remove from heat and stir in Cheddar cheese until it melts (reserve 1/2 cup for top of casserole). Add tomatoes. Heat gently until mixture thickens again and turn into a 2 quart casserole. Add frozen corn, thawed, and pearl onions. Sprinkle 1/2 cup Cheddar cheese over top. Bake uncovered, 50 minutes at 350° F.