A 200-year-old pub in Gosberton near Spalding is set to be demolished and replaced with housing.
The Duke of York has been shut since the 2020 lockdown and is too expensive to reopen, according to the application.
Council officers have recommended the proposals are approved, but ward councillors are divided.
If South Holland District Council’s planning committee follows the recommendation, permission will be given to knock the building down and replace it with seven new homes.
The Duke of York has been opened since at least 1881, but the pandemic had a “disastrous impact” on the already struggling business.
The planning application says that the repair costs are now so steep that they are unviable.
The owner is now looking to redevelop the site, but councillors have mixed views on whether this should go ahead.
Councillor Jane King said: “Unfortunately, these days pubs are not viable businesses anymore and the buildings are left to fall into disrepair. We have had many of these in our area doing just this.
“As long as any new buildings are in keeping with the rest of the area and is not overdeveloped, I think this should be allowed.”
Councillor Walsh agreed, saying the application deserved “serious consideration” if the pub wasn’t sustainable.
However, Councillor Henry Bingham said he didn’t want to see the door closed on the venue’s future.
“I have concerns about the loss of this amenity to the village. Once an amenity such as this is lost, it is rarely replaced,” he said.
“Although Covid has put serious strain on public houses as well as other businesses, I cannot see sufficient evidence to be able to support redevelopment of this public house.”
The proposed housing on the site will comprise of seven three-bedroom homes, and an existing two-bedroom home.
The plans were submitted through agent Richards Architectural.
The council’s planning meeting will be held on Wednesday, September 7 to decide whether the application is granted permission.