In a Dutch oven or heavy stockpot over medium heat, brown the bacon.  Using a slotted spoon remove the bacon from the pan reserving the grease.  Add enough butter to make 2 tablespoons of fat. Melt the butter over medium heat.  Add the potatoes and onions to the pan cooking for 5 minutes or until the onions are soft.  Add the garlic and the cayenne pepper; cook for 1 minute, stirring constantly. Using a slotted spoon remove the potatoes, onions, and garlic to a bowl or plate, reserving any fat in the pan.

Melt enough butter to make 4 tablespoons of fat.  Sprinkle in 1/4 cup flour and whisk to combine.  Cook for 2-3 minutes, stirring constantly.  Whisk in the chicken broth and milk in several intervals alternating between the two.

Add the potatoes, onions, and garlic back to the pot and simmer until the potatoes are tender.

Whisk in both shredded cheeses until melted.  Remove from the heat and stir in the bacon, sour cream, chives, and salt and pepper to taste.