I got call from a collection agent to day saying there client is I owe them $450 ,for damage to city property/ and I have no idea what they are talking and won't show me how the can say this ,do I counter sue city and the collection agent ,so they have to bring evidence to court and should not my car ins be the ones to sue.

You can't countersue unless you have damage to sue over. If you are not damaged you wait until you get the notice to appear in Small Claims Court, you review the evidence and you deny the claim.

You also should turn this over to your auto insurance company if you have not done so already - if you do not and the claim is not timely filed the company can deny coverage.