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🐛 Fix init instance tests and add init of a local instance in cwd #5690

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Run time

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Job	Run time
hub-prod	3m 33s
hub-local	3m 24s
hub-cloud (prod, 3.11)	4m 51s
hub-cloud (staging, 3.10)	4m 36s
storage	1m 46s
docs	48s
notify	3s
coverage	15s
	19m 16s