The other developer can ignore that message if the intention is to run the app on the Simulator. But you must use code signing in order to run an app from Xcode on a device, even for testing purposes, even if the app is never going to be submitted to the App Store. And that costs $99/year. End of story.
You could turn your account into a Company account and put this developer on your company; that way the developer is covered under your $99.
Or, if you just want to send the app to someone for testing and you don't need them to run the app directly from Xcode on a device, you can create an Ad Hoc build targeted to their device.
And of course the developer can look at your code, test on the simulator, and run your previously built Ad Hoc build on the device - but not run from Xcode on the device, i.e. the developer can not build for a device without someone paying that $99/year fee.