Place potatoes in medium pot, cover with water and set over medium-high heat. Bring to boil, lower heat and simmer until fork tender, about 15 to 20 minutes. Drain and let sit in colander until cool to the touch.
Preheat oven to 375°F. Butter 9-inch square baking dish, set aside.
Dice potatoes and transfer them to large bowl. Add melted butter, sour cream, 3/4 cup Cheddar cheese, 3/4 cup Mozzarella cheese, salt, pepper, garlic, bacon (reserve about 2 tablespoons for garnish) and chives (reserve about a tablespoon for garnish). Stir until evenly combined. Break up some potatoes with a wooden spoon or potato masher, leaving some of them chunky.
Pour the mixture into the prepared baking dish and spread evenly. Top with remaining cheese and bake until bubbly and golden brown on top, about 15 to 20 minutes. Remove from oven and top with reserved bacon and chives. Serve warm.