Google app engine deployment error: Class file is Java 8 but max supported is Java 7

Hi, 

Following this tutorial: https://www.jetbrains.com/help/idea/2016.3/getting-started-with-google-app-engine.html#before_start I am have the following problem...

When I try to deploy the google app engine application I get the following error

java.lang.IllegalArgumentException: Class file is Java 8 but max supported is Java 7: org/eclipse/jetty/apache/jsp/JuliLog.class in /Users/appengine-java-sdk-1.9.50/jetty93/jetty-distribution/lib/apache-jsp/org.eclipse.jetty.apache-jsp-9.3.16.v20170120-nolog.jar
Unable to update app: Class file is Java 8 but max supported is Java 7: org/eclipse/jetty/apache/jsp/JuliLog.class in /Users/appengine-java-sdk-1.9.50/jetty93/jetty-distribution/lib/apache-jsp/org.eclipse.jetty.apache-jsp-9.3.16.v20170120-nolog.jar

I am using java version 1.7.0_71 in the project structure. My compiler settings are set to generate 1.7 compatible bytecode

Using IntelliJ IDEA 2016.2.4

Does anyone know a fix for this?

Thank you.