3 years later and this issue is still a problem…
The workaround is to manually copy the “workspace.xml” file from the “sitename.idea” folder to the .idea folder in the root of the PHPStorm project.
I am uncertain as to what other issues this will cause that we may not see or that may not be fixed by manually copying the file over. Therefore, I would not suggest using local on any projects that are very important when doing this.
UPDATE: This “workaround” may not always work. On subsequent tries the “workspace.xml” file was not even created in the local root site folder until Xdebug + VS Code was added and invoked. So the whole Xdebug + PHPStorm add-on may be messed up.