How do you fight a developer who threatens my credit via collections on invalid debt.?

3 Years ago I purchased a new home. One of the covenants or stipulations upon purchase of said property was that I agree to reimburse the developer for terrace trees (trees placed in the area between the street and sidewalk) placed on the affected lot - well my lot only received one tree in front of it. The developer divided all of the cost of tree planting by the number of properties. This means some property owners wil receive as many as 5 trees, but pay the same as me receiving only one! So my math says I owe $187, and he wants $443! He has threatened sending to collections after he rejected my offer of $200. Should I pay him the $443 and sue for return of the money I think is fair, and preserve my credit, or take my lumps and sue later. I have warned him that I may invoke legal action if himself or the collection agency damages my credit.....help!!