You need to openly discuss all of your options with your attorney. If you are still confused as to which path to take, you should obtain a second opinion from another attorney. Asking attorneys to second guess your counsel here on limited facts is not likely to be very helpful to you.
However, your attorney will explain that sometimes your options are very limited when you are the Defendant.
I have more of a comment than an answer: If the facts are as you state, this developer must have more money than sense. I'm not a Florida attorney, but it is hard to imagine that the developer has a legal claim against you if all that you did was report a violation of a historic ordinance.
Having said that, I fully agree the other answer that going to court as a defendant carries a fair amount of risk with it. An attorney here on Avvo really can't comment on your attorney' s recommendation without knowing how that attorney has assessed the option, but you certainly need to make sure that all alternatives to trial are considered and that you make an informed decision. Good luck.