Abstract: A heat pump system dehumidifies air in an enclosure containing a source of humidity such as a swimming pool. The heat pump system invention transfers rejection heat from the primary refrigerant loop to a secondary water loop. The secondary water loop is coupled in heat exchange relationship to the primary condenser of the primary refrigerant loop for receiving the rejection heat including the latent heat and sensible heat from the refrigerant. The secondary water loop incorporates a circulating water pump and a storage tank and affords a substantially uniform load on the compressor, condenser and refrigerant of the refrigerant loop. The secondary water loop then provides versatility and flexibility in meeting variable load demand such as conditioning the enclosure air, heating water in open receptacles such as pools, dumping heat outside the enclosure, or adding heat to the enclosure. The secondary water loop displaces the variable load requirements from direct impact on the primary refrigerant loop.