It was announced a year ago that a disused RAF station at Helmswell Cliff near Gainsborough was earmarked to house 750 asylum seekers.
But a final decision has not been made and villagers say being left in limbo is having a terrible impact on the local economy.
The government says it is continuing to assess the feasibility of the site.
Area 'blighted'
Derek Moffat, from the Helmswell Cliff Action Group, told Radio Lincolnshire they want to know what is happening.
"Over the last 12 months it has done the area absolutely no good at all.
"It has caused difficulties over house prices and it has certainly hindered inward investment.
"It has cast a blight over the area and the sooner the Home Office get rid of it and remove this threat the better."
No timescale
A spokeswoman for the Home Office said the area had been earmarked but "detailed consultation" was continuing about the suitability of the site.
She could not say when a decision would be made.
"Negotiations are ongoing, " she said.
"When an announcement will be made, the local authorities will be informed."
The government has said it wants to create two 750-strong centres in Bicester, Oxfordshire and at RAF Newton in Nottinghamshire.
A proposal to create another centre in Throckmorton in Worcestershire has already been scrapped by the Home Office.